Questions and Answers

1. What are the benefits of exchanging vs. selling?

  1. 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..
  2. 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.
  3. Any gain from depreciation recapture is postponed.
  4. You can buy and sell properties to recalibrate your investment portfolio without paying tax on any gain.