What is a section 1031 exchange?

To accomplish a Section 1031 exchange, there must be an exchange of properties. The simplest type of Section 1031 exchange is a simultaneous swap of one property for another. Deferred exchanges are more complex but allow flexibility. They allow you to dispose of property and subsequently acquire one or more other like-kind replacement properties.

What is a reverse 1031 exchange?

This is called a reverse 1031 exchange and shares many of the same rules and requirements as a normal exchange. By adhering to these timelines and rules, you can successfully complete a 1031 exchange and defer capital gains tax on your investment property.

How do I do a 1031 exchange?

Follow these steps to do a 1031 exchange: Identify the property you want to sell. This must be an investment property—not a primary residence—and it should ideally have appreciated in value since you purchased it to take full advantage of the tax deferment benefits of a 1031 exchange. Engage a qualified intermediary.