1031 Exchanges allow investors to exchange their real estate investments without having to pay capital gains taxes on the sale of that property. By using a 1031 Exchange wisely, investors can essentially use the full, tax-free capital from the sale of their original property towards the purchase of an equal or greater valued property. By deferring the capital gains taxes through a 1031 Exchange, investors can draw from a larger pool of funds to put towards their next real estate investment.
1031 Exchanges Also Allow Investors To:
Additionally, the revenue earned from the sale of a property within a 1031 Exchange can be held indefinitely. An investor can choose to make any number of 1031 Exchanges before finally selling outright, at which point capital gains taxes must be paid.