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Dated: September 13 2022
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As an investor, a 1031 Exchange may be right for you. So what is a 1031 Exchange exactly?
In broad terms, a 1031 exchange ( also called a like-kind exchange or a Starker exchange) is a swap of one investment property for another. Most property swaps are taxable as sales, however if you meet the requirements of a 1031 exchange, you'll either have no tax or limited tax due at the time of the exchange. With a 1031 exchange you can change the form of your investment without cashing out or recognizing a capital gain which in turn allows your investment to continue to grow tax deffered. There is no limit on how frequently you can do a 1031 exchange which allows you to roll over the gain from one piece of real estate investment to another and another. Even if you have a profit on each swap you avoid paying tax until you cash out, sell your property for cash, many years later.
In order to qualify most exchanges must be of like-kind, meaning the property sold and the replacement property have to be similar in nature and character, but not necessarily the same quality or grade. For example, an improved single-family property held for investment could be exchanged for an unimproved single-family property held for investment. Similarly, a ranch or farmland held for investment can be exchanged for single-family rentals used for business or investment purposes. Properties used primarily for personal use, such as a primary residence, a second home or a vacation home, do not qualify as a like-kind exchange.
If you'd like to learn more about 1031 exchanges, along with the 4 most common types give me a ring! I have helped countless investors navigate a 1031 exchange.
As a side note, you should consult an investment, tax or legal professional of your choosing to advise you of the benefits and risks of your specific transaction.
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All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.
Updated on September 22, 2026 12:43 PM UTC
