The 1031 Tax Deferred Exchange is a method by which owners of investment property may transfer the equity in their current property into a new property without triggering a taxable event.
What will a 1031 Tax Deferred Exchange do for you?
The 1031 Tax Deferred Exchange preserves your equity by deferring the tax you would pay on the Capital Gain you would realize if you sold your property outright. It allows you to re-leverage your investment, thereby increasing your real estate holdings. You lose none of your equity to taxes, thus allowing you to transfer your maximum equity into the purchase of your next property.
There are several terms used in defining the Exchange process, as well as 3 basic rules.