What’s a 1031 Exchange; why and when is it leveraged?

A 1031 exchange allows (non-owner-occupied) property owners to sell their property and reinvest the proceeds, without paying capital-gains taxes. This technique is for an array of goals such as: converting rental property into an eventual owner-occupied home, for estate-planning, selling one property and purchasing multiple other properties that can more simply be passed down, it can also be used to increase cash flow— selling vacant land an purchasing a rental unit— the applications are vast! There are, however, a few requirements to the 1031.

First, ownership must be consistent between the sold and purchased properties,

second, the properties must be of “like-kind” meaning the purpose is that of investment or business, and finally the time between the sale of previous property and purchase of new property much be completed in 180 days. While this technique can be extremely beneficial planning and preparation are key to a successful 1031 exchange.