1031 Exchange | Exchange or Pay Uncle Sam? | FAQ's about 1031 Exchange

What is a 1031 Exchange?

Internal Revenue Code (IRC) Section 1031 is one of the last remaining tax loopholes. It is a powerful tool that allows investors to exchange any investment property for any other investment property. For your exchange to be allowed, you must follow specific IRS regulations.

Here is an abbreviated list of the regulations:

• The properties being exchanged must be of like kind.
   For example, you may exchange:
        o an apartment building for a triple net or TIC property
        o land for an office building
        o a single tenant property for a retail center
        o rental houses for an industrial building
        o any investment property for any other investment property (as long as it is not occupied as primary residence).

• You must identify and close on your replacement property within a specific period of time.

• 100% of the proceeds from your current property must be held by a Qualified Intermediary and applied toward your replacement property.

• Your replacement property must be of equal or greater value to the property you have sold.

• Properties being exchanged must be used for investment. Personal residences are not exchangeable.