Here’s how 1031 exchanges help real estate investors buy and sell.

Recently, we’ve received a couple of requests for information about tax strategies for investment properties. The 1031 exchange is one such strategy available to you, so today I’ll quickly explain what that is and how it works when you’re looking to buy and sell investment properties.

A 1031 exchange is a capital gains tax deferral that can occur when you sell an investment property in order to buy another investment property. The exchange has many rules attached to it. For example, you have a set amount of time to identify a new property, which must be similar to your own property; you can’t sell a commercial property and reinvest that money into a residential property. You also have to close out the transaction within a certain period.

I’m not a CPA or tax expert by any means, but we do have a great pool of resources including title companies and 1031 exchange experts who can dive deeper into the details for you. If you would like to learn more about how 1031 exchanges work or have other questions, don’t hesitate to give us a call or send an email. We’d be glad to help.