1031 Exchange Question

[Quincy Baker]

I’m trying to understand the basics of 1031 Exchange.

Q:

1. The benefit is that while capital gain taxation is deferred it temporarily frees more money (profits/equity) for re-investing is this the point?

2. Does 1031 help to avoid double taxation? In other words if one didn’t utilize a 1031 on a sale and reinvestment transaction they would normally pay capital gain taxes on the sale and then taxes on the new replacement property?

Once 1031 is in place when those deferred taxes come due (whenever that is) do you pay taxes on both the sale “and” the replacement property?

3. For how long are capital gain taxes deferred on the transaction? And do they remain deferred as long as an ongoing or new successive exchanges are in motion?

Thanks BP!