1. What are the benefits of exchanging vs. selling?
- A Section 1031 exchange is a technique available to delay or potentially eliminate taxes due on the sale of property that is held for use in productive trade or business or held for investment..
- By deferring the tax, you have more money available to invest in a replacement property. In effect, you receive an interest free loan from the federal government, and some states the state government, in the amount you would have paid in taxes.
- Any gain from depreciation recapture is postponed.
- You can buy and sell properties to recalibrate your investment portfolio without paying tax on any gain.