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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.

When can a 1031 exchange be a transition rule?

The TCJA includes a transition rule that permitted a 1031 exchange of qualified personal property in 2018 if the original property was sold or the replacement property was acquired by Dec. 31, 2017.

What is the holding period for a 1031 exchange?

There is no statutory holding period for property acquired in a 1031 Exchange. However, the IRS could potentially challenge an exchange if the property is sold too soon. A holding period of one year is generally considered safe.

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