Designed as a tax-deferral mechanism for real estate investors, a 1031 exchange empowers you to sell a property, acquire another, and delay capital gains tax on a real estate transaction. This guide will succinctly walk you through the process, from defining "like-kind" properties to measuring the importance of strict IRS timelines. We’ll cover the role of intermediaries and the crucial steps to maintaining the exchange’s tax-deferred status—giving you a clear road map to maneuvering these exchanges with confidence.
Key Takeaways
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The 1031 exchange allows investors to defer capital gains taxes on property sales by reinvesting in like-kind properties within specific time frames, with strict IRS guidelines requiring adherence to a