The 1031 Tax Exchange

Section 1031 of the U.S. Internal Revenue Code makes it possible for investors to put off paying capital gains taxes on properties that they sell provided they replace that property by purchasing a 'like-kind' property. Provided that all of the gain goes to the purchase of the second property, there would be no taxable money.

The investor has 45 days, from the time of sale, to identify possible replacement properties. The purchase of the new property must be completed within 180 days after the sale of the first property. Should either time limit not be met the tax exchange falls through. There are no extentions allowed. These identified properties must be given to a qualified intermediary within the time period.

These are the basics to the tax exchange but there are many variations. You should consult a real estate attorney for other 1031 rules and regulations.

Links

www.1031taxexchange.org
NAR - Field Guide to 1031 Exchanges
The 1031 Exchange Experts
1031 Exchange Made Simple