Section 1031 Irs

Section 1031 a of the internal revenue code 26 u s c.

Section 1031 irs. 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. Buyer hereby acknowledges that seller intends to complete a tax deferred exchange under irc section 1031 provided that the exchange will not delay the closing hereunder or cause additional expense to the buyer. Gain deferred in a like kind exchange under irc section 1031 is tax deferred but it is not tax free.

Irc section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like kind exchange. An exchange can only be made with like kind properties and irs rules limit use with. 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.

Paragraph 3 of section 1031 a of the internal revenue code of 1986 as amended by subsection a shall apply a to transfers after the date of the enactment of this act july 18 1984 and. Irs section 1031 has many moving parts that real estate investors must understand before attempting its use. Exchange of property held for productive use or investment on westlaw findlaw codes are provided courtesy of thomson reuters westlaw the industry leading online legal research system.

Internal revenue code 1031.