Section 1031 Exchanges

A 1031 exchange is governed by code section 1031 as well as various irs regulations and rulings.

Section 1031 exchanges. The term which gets its name from irs code section 1031 is bandied. We ll discuss like kind property in more detail in section four. The role of qualified intermediaries.

An exchange is a real estate transaction in which a taxpayer sells real estate held for investment or for use in a trade or business and uses the funds to acquire replacement property. The irs code s section 1031 makes it possible for an investor to defer paying capital gains taxes on an investment property upon its sale as long as another like kind property is bought with. In real estate a 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred.

Internal revenue code which allows you to avoid paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value. 1 to put it simply this strategy allows an investor to defer paying capital gains taxes on an investment property when it is sold as long another like kind property is purchased with the profit gained by the sale of the first property. The term 1031 exchange is defined under section 1031 of the irs code.

A 1031 exchange gets its name from section 1031 of the u s. It states that none of the realized gain or loss will be recognized at the time of the exchange. Section 1031 is a provision of the internal revenue code irc that allows business or investment property owners to defer federal taxes on some exchanges of real estate.

1031 states the recognition rules for realized gains or losses that arise as a result of an exchange of like kind property held for productive use in trade or business or for investment. 1 section 1031 is also.