Internal Revenue Code (IRC) Section 1031 allows astute investors to save substantial dollars through what is known as a “Like-kind” exchange. If an investment property is sold and the proceeds are used to purchase a “like-kind” investment property (such as land for a duplex or an airplane for an airplane) capital gains taxes may be deferred.

DEFINITIONS

Delayed Exchange: The most common of all services provided, A Delayed Exchange gives investors up to 180 days to purchase a replacement property once the relinquished property is closed. The use of a Qualified Intermediary is required to complete a valid Delayed Exchange.

Reverse Exchange: A Reverse Exchange allows the Taxpayer to purchase a replacement property before the actual closing of the relinquished or exchanged property.

Simultaneous Exchange: A Simultaneous Exchange occurs when both the relinquished property and the replacement property close and record on the same day.

Built-to-Suit Exchange: This type of exchange occurs when the Taxpayer uses exchange proceeds to make improvements or develop new replacement property.

Personal Property Exchange: Internal Revenue Code Section 1031 allows investors to exchange many types of property other than real estate; Investors may exchange for example, rail cars, trucks, ships, classic cars or livestock, among other assets.

Disclosure Note: This information is subject to interpretation and meant to help the consumer understand information surrounding a transactional nature for 1031 exchange. It is important to seek specific and individual guidance and information from you financial advisor. This information is merely an overview and is not intended to be exhaustive. Consult with your tax advisor to determine whether an exchange is appropriate for your circumstances.