A 1031 Exchange makes it possible for investors to sell and buy property of like kind, while deferring capital gains taxes.
Section 1031 of the IRS code offers investors a reliable strategy for the protection of their real estate assets. A successful 1031 Exchange allows the investor to re-invest 100% of the equity from the sale of a property INTO the purchase of a chosen Replacement Property, without recognizing any gain.
This type of property sale and reinvestment can either be done through a simutaneous transaction, or delayed 1031 Exchange. In most cases, a 1031 exchange is done as a three-party delayed transaction. A 1031 Exchange, also known as a "Starker Exchange", is in which an intermediary ensures a reciprocal transfer of the properties and provides a "safe harbor" against the actual receipt of Exchange funds.
