1031 Tax Exchange

Created by the I.R.S. in 1990, section 1031 of the Internal Revenue Code allows taxpayers, with the aid of a Qualified Intermediary, to sell investment or income property solely for the purchase of other "like-kind" property within 180 days and to defer the capital gains taxes normally associated with such a sale. In essence, the taxpayer is exchanging one income property for another and deferring the gain in the process.

Known as a 1031 or a tax-deferred exchange, this strategy can be utilized again and again, allowing taxpayers to continue to defer gains throughout their lifetime and to accumulate more and more quality real estate.

With a 1031 Exchange, taxpayers can also consolidate, diversify, or convert the nature of investment properties in preparation for relocation, retirement, or even setting up heirs to inherit gain-free properties in the future. With a little planning, the 1031 Exchange can be a perfect tool for acquiring an ideal retirement home or setting up an inheritance for one's children.

By learning the basics of 1031 Exchanges, you can enhance your value as an advisor to your clients. And here's the best part: there are specific marketing strategies loan officers and real estate agents may utilize together to attract clients who will benefit from these transactions.