1031 exchange
Also called: like-kind exchange · tax-deferred exchange · Section 1031 exchange
A transaction structure that may defer recognition of gain when qualifying real property is exchanged for qualifying like-kind real property.
What it means in practice.
Section 1031 generally applies to real property held for investment or productive use in a trade or business. Since 2018, personal and intangible property generally do not qualify. A properly structured exchange can postpone current recognition of gain; it does not erase tax automatically.
Why it matters.
This is the umbrella concept behind the entire platform. The facts, ownership, timing, use of the property and transaction structure all matter.
Additional notes.
Section 1031 generally applies to real property held for investment or productive use in a trade or business. Since 2018, personal and intangible property generally do not qualify. A properly structured exchange can postpone current recognition of gain; it does not erase tax automatically.
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