Understanding 1031 Exchanges

[Bette Hochberger]

1031 Exchange: A Strategy to Defer Tax on Real Estate Gains

A 1031 Exchange allows real estate investors to defer the capital gains tax due when selling a property by reinvesting the proceeds into a “like-kind” property. This strategy is excellent for preserving wealth and maximizing investment capital.

Key Points:

1. Like-Kind Property: Property acquired must be similar in nature or character.
   
2. Timeline: Identification of a replacement property must occur within 45 days, and acquisition must be completed within 180 days from the sale of the relinquished property.
   
3. Qualified Intermediary: A qualified intermediary must hold the funds between the sale of the relinquished property and the purchase of the replacement property.
   

 Bette Hochberger, CPA, CGMA.