What Is A 1031 Exchange And How Can It Benefit Me?

Posted by Lyndsey M. O'Connell | Feb 07, 2019 | 0 Comments

We all want to pay less taxes. All of us. 

It is for this reason that the 1031 Exchange can be so beneficial. IRC § 1031 allows investors to sell properties and reinvest the profits into another piece of property and defer the capital gains taxes (click here for more on that topic). 

Specifically, the statute states:

“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”

Not only does this statute allow for significant tax benefits, but it also allows for significant reinvestment and portfolio growth, as greater down payments can be made using the funds! It also provides preservation of equity, leverage in purchasing and diversification of real property assets. With all of this being said, there are deadlines for compliance as well as non-residence requirements. Therefore, it is highly suggested that you find a professional to aid you in compliance so that you can adequately take advantage of the benefits this statute offers. 

About the Author

Lyndsey M. O'Connell

Lyndsey is a Mississippi native who has found a place to call home in Colorado. She attended high school in the Mississippi Delta at St. Joseph Catholic School. She attended college at Millsaps College in Jackson, Mississippi, obtaining her BS in Special Education. Post-graduation, Lyndsey spent ...

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