1031 Exchanges Explained: What This Tax Strategy Means for Investors

The goal of 1031 exchange for investors is simple: tax deferral. What is difficult for the solo investor: completing all Section 1031 of the U.S. Tax Code requirements without the advice of necessary professionals.

These qualifications are key to making sure that your 1031 exchange investment transactions avoid an instant tax bill.

Although many investment properties can meet the qualifications for an eligible property in a 1031 exchange, you can face real tax consequences if you do not plan the investment transactions correctly. 

A 1031 exchange allows an investor to sell and reinvest the proceeds in a similar qualifying property to defer paying any taxes.

1031 Exchanges Defined for Investor

When the investment property, also known as the relinquished property, is sold, the proceeds must go directly to invest in another real estate investment property.

When Can a 1031 Exchange Apply?

The advantages of 1031 exchanges are understandably appealing. Who wouldn’t want to avoid paying any capital gains taxes on the sale of investment or business property? 

Why Are 1031 Exchanges So Popular With Real Estate Investors?

Real estate investors trying to navigate a 1031 exchange on both sale and purchase requirements find significant value in having a transaction coordinator's general oversight of the transactional details.

How to Set Up a 1031 Exchange?