1031 Exchanges

1031 Exchanges are tax-sensitive transactions that are allowed under Section 1031 of the Internal Revenue Code.  Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment.  A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of "like-kind," while deferring the payment of capital gains taxes on the transaction.  The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax.  In other words, the taxpayer's investment is still the same, only the form has changed.  Therefore, it would be unfair to force the taxpayer to pay tax on a "paper" gain.

If you own appreciated investment real estate that you are considering selling, please consult with the experienced attorneys at the Law Office of Jim Eimers.  They can explain the advantages and disadvantages of a 1031 Exchange to you, and can work closely with you and other professionals to facilitate a 1031 Exchange.