1031 Exchange
Governed of the Internal Revenue Code (IRC) A tax deferred exchange is the method by which one property can be sold and another “like-kind” property acquired tax free. The “likekind” definition for real estate is very broad, any real estate is like-kind with any real estate held for investment
In a 1031 Exchange, the gain on the sale of certain property may be tax-deferred >
→ Federal capital gains taxes
→ State capital gains taxes (in some states)
→ Depreciation recapture (25% rate)