IRC Section 1031: Like-Kind Exchanges
Tax free real estate investing.
Only for gains. Only for profit.
A way out of capital gains taxes.
IRC Section 1031 (a)(1) 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."
A properly structured 1031 exchange serves as the ultimate gateway to deferring capital gains taxes while also facilitating significant portfolio growth and increasing returns on investments.
1. Asset being sold MUST be an investment property; CANNOT a personal residence.
2. Asset being purchased with proceeds MUST be of similar value or more to the asset being sold.
3. You MUST identify the property or asset in which you are purchasing in the like-kind exchange within 45 days of the sale.
4. The proceeds of the sale MUST be used to purchase the other asset within 180 days of the first asset sale.
These considerations must be followed during the like-kind exchange to ensure that a tax liability is not created upon the sale of the first asset.