The new buzz...."1031 exchange" - Posted by chris

Posted by Irwin on December 05, 1998 at 07:26:36:

A 1031 Exchange is used to defer payment of capital gains taxes on the sale of investment property (as opposed to property bought for the purpose of resale).
It is done by exchanging a property for property of like kind, rather than receiving cash from the sale.

The new buzz…“1031 exchange” - Posted by chris

Posted by chris on December 05, 1998 at 05:17:08:

what is it???

i have gotten the gist that it is a method to pass off capital gains created from the sale of a property. not sure it that is close or i am off base. would someone please be so kind as to explain this process a little further? i have seen this “buzz” word fairly often recently but have yet to see a post describing what in the world it is. thanks for your insight.

Re: The new buzz…“1031 exchange” - Posted by Scott Britton

Posted by Scott Britton on December 05, 1998 at 08:20:35:


“1031 Exchange” refers to IRS Code Section 1031. This code section allows for “like kind” exchanges of property held for investment… thus defering any gain.

Since it was often difficult to find someone else who wanted your property… and you theirs… this section was broadened with the “Starker” case… which allowed “deferred exchanges”.

So now… you can find a buyer for your property… sell it… have an intermediary hold the funds… then direct them to go out and purchase other replacement property for you within a set time frame. Works like a champ… but you have to be sure to do it right!

I wrote a very detailed newsletter on this topic that is available in the back issue set JP sells in the store here. Check it out. This information can more than pay for the complete set.

Best of Real Estate Success!

Scott Britton