A 1031 Exchange (Tax-Deferred Exchange) is one of the most powerful tax deferral strategies remaining available for taxpayers.

In the summer of 1990, the I.R.S. finally came out with the long awaited rules on Deferred Exchanges. Section 1.1031 of the Internal Revenue Code laid out in detail the procedure for turning a sale and purchase type transaction into an exchange.

These new rules allowed owners of certain types of like kind Real and Personal property to sell their property and buy other like kind property without paying the Capital Gains Tax.

The like kind provision for Real property is quite broad, and includes Land, Rental, and Business property. Any of which, can be exchanged for the other. The like kind provision for Personal property is more restrictive.

This type of property must be in productive use in a business (depreciable property), and can only be exchanged for the same type of property.

As an example a rental home for a rental home, or an apartment building for an apartment building. The exchange process may only be used for income related properties, not your personal residence. The replacement property must be purchased within 180 days after the transfer of the relinquished property.

If you are selling an investment property, I can assist you through the 1031 exchange process and locating a like kind property.

Property Which Does Not Qualify For A 1031 Exchange includes:

• A personal residence
• Land under development
• Construction or fix/flips for resale
• Property purchased for resale