Internal Revenue Code Section 1031
“Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), the exchange of certain types of property may defer the recognition of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due.” Internal Revenue Code Section 1031
If an investor purchased a property and after an amount of time sell it for more than the original purchase price, the difference would be seen as a gain. This gain would subject to several types of taxes. To avoid paying the taxes at the time of sale, the investor could reinvest this gain into another property(ies) with a 1031 Tax Exchange.
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