IRS §1031 allows investors to sell investment real estate and acquire replacement investment real estate while deferring all capital gains tax. A properly structured 1031 Exchange not only protects investors from hefty tax obligations, but also allows for more dramatic portfolio growth and increased return on investment, since 100% of the investor’s equity remains available for reinvestment.
While the power of the 1031 Exchange cannot be understated, there are specific IRS rules governing the process, as well as strict deadlines and filing requirements. That is why it is important to work with an experienced qualified intermediary who fully understands the complete exchange process and can ensure compliance with all IRS requirements. Relying on an experienced exchange professional is the best way to ensure the validity of your 1031 Exchange.