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What is a 1031 exchange?

A 1031 exchange, also known as a like-kind exchange, is a powerful tax-deferment strategy popular with experienced real estate investors. It allows you to defer capital gains taxes on an investment property when it’s sold—as long as the investor purchases another like-kind property with the proceeds of the first property sale.

Can a 1031 exchange defer capital gains taxes?

A 1031 exchange, named after Section 1031 of the tax code, can defer capital gains taxes on a sale of investment property by reinvesting in similar property.

Can a 1031 exchange help you grow your real estate investment portfolio?

Investors can grow their real estate investment portfolios faster by taking advantage of a 1031 exchange. Instead of paying taxes on their proceeds, they keep all their money and reinvest it into a new property. Let’s say the value of an investor’s rental property has grown, and they want to reinvest in another property.

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