What is 1031?
Effectively, Internal Revenue Code Section 1031 exchanges allow investors
to sell like-kind property and reinvest
the proceeds in another property without having to pay taxes that
would otherwise be owed on recognized gain from sale.The payment of
such capital gains tax is deferred, representing only a potential
tax which is not owed unless and until the replacement property is
sold in a subsequent taxable transaction.The taxes may, in some cases,
be avoided all together, for example if the replacement property passes
through an estate and its basis is stepped up to the market value
at the time of death.
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