1031 Exchange Explained

1031 Exchange Explained

Internal Revenue Code provides that no gain or loss will be recognized on the exchange of any type of business use or investment investment real estate for any other business use or investment investment real estate. This means that a 1031 exchange is a rollover of equity of like investment real estate, rather than an avoidance of tax and allows for the transaction to take place with full tax benefits attached. 1031 Exchanges are useful in a wide variety of circumstances. They provide excellent opportunities for resourceful real estate investors to create transactions which would not be possible through a sale/purchase format. The overriding advantage of exchanging lies in the ability to move equity from investment real estate to investment real estate without having to pay the capital gains taxes. exchangers can create an entire investment program using the wide variety of benefits available, and a real estate investor can move successively from one 1031 exchange to another any number of times.