1031 Tax Exchange
A tax deferred exchange allows us to sell a piece of investment (ie: a rental), trade or business property, buy a new property with the gain or profit from the sale, and not owe taxes on the sale immediately. If you eventually sell the new piece of property, you would owe taxes at that time. Generally, all gains and losses on sales of real estate are taxable, but an exception lies where the property sold is traded or exchanged for ‘like-kind’ property. The new property is seen as a continuation of the original investment, so taxes are not due at the time of the sale.
A tax-deferred exchange is a great way to maximize your wealth. By keeping your investments growing without immediately paying taxes, you can do wonders for your net-worth. This concept is important to understand when you begin to accumulate rental roperties.
A thorough explanation of Tax Deferred Exchanges can be found at www.realtyexchangers.com.
