1031 Exchange

1031 EXCHANGE

Since 1921, section 1031 has permitted a taxpayer to exchange business-use or investment assets for other like-kind business use or investment assets without recognizing taxable gain on the sale of the old assets. The taxes which otherwise would have been due from the sale are thus deferred.

A 1031 Exchange allows investors to defer Federal capital gains tax, state ordinary income tax, net investment income tax, and depreciation recapture on the sale of Investment property if certain criteria are met including:

Buy replacement property for equal or greater than sold for and reinvest all proceeds
Identify replacement property within 45 days of close of sale
Purchase replacement property within 180 days of close of sale
Must Sell and Buy property that is considered “like-kind” to each other
Process must be handled by a Qualified Intermediary (QI)

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