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What happens if you exchange a business or investment property?

Under Section 1031, if you exchange business or investment property solely for a business or investment property of a like kind, no gain or loss is recognized until the newly acquired property is sold. Beginning in 2018, The Tax Cuts and Jobs Act limited like-kind exchanges to real estate.

What is a property exchange?

Classically, an exchange involves a simple swap of one property for another between two people. However, the odds of finding someone with the exact property that you want who wants the exact property that you have are slim.

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.

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