The 1031 tax deferred exchange is also referred to as a Starker exchange, a like-kind exchange, a like-kind swap, a real-estate swap, real estate exchange, delayed exchange, simultaneous exchange, construction exchange, improvement exchange, multi-property exchange, multi-party exchange, and sometimes even a 'starker' - in honor of T.J. Starker, whose pioneering lawsuits give us the advantages we enjoy today through Internal Revenue Code (IRC) 1031.

No matter how you refer to it, a 1031 Tax Deferred Exchange can be an investor's best friend.  The IRS rules allow real estate investors to defer paying taxes on qualifying 'exchanges' provided the investor meets a few criteria and uses a qualified intermediary (sometimes called a facilitator or accomodator.)

Who should use a 1031 tax deferred exchange?
Any real estate investor who is contemplating buying or selling an investment property.

Properties that may qualify for a 1031 exchange Apartment Duplex Triplex Fourplex Rental House Commercial Property Unimproved Property, Land, Vacant Lots Multiple Properties 30-Year Leases

Properties that do NOT qualify for a 1031 exchange Primary Residences Vacation Homes Second Homes Stocks, Bonds, or Notes Stock in Trade or Other Property Held Primarily for Sale Other Securities or Evidence of Indebtedness Certificates of Trust or Beneficial Interest Partnership Interests And a few other exclusions

About 1031 Tax Deferred Exchange
Tax deferred exchanges have been around since the 1920s, but became more accessible to investors in 1979 following several court cases, thanks to T.J. Starker.  Following those court cases, a 1031 exchange became far less complicated and certainly more 'popular'.

Like-Kind Properties
Many people mistakenly believe that by using a 1031 exchange, the exchangor has to swap their property for a similar property at the same time.  In the old days, that was the case - corporations would literally trade one deed for another and the properties truly did have to be nearly identical.

HOWEVER, currently, the rules regarding LIKE-KIND are more concerned with the intent of the investor moreso than the property itself.

Just SOME Possible Property Exchanges Vacant Land  <-->  Single Family House Rental House  <-->  Rental Condo Rental Condo  <-->  Retail Center Duplex  <-->  Triplex Apartment Building  <-->  Office Building Office Building  <-->  Vacant Lot

  

With 1031 exchange, a real estate investor can exchange a vacant lot for a rental condo, a rental house for a shopping center, a rental condo for a vacant lot, a shopping center for an apartment building, and just about any other combination you can imagine.  With a properly structured 1031 tax deferred exchange, an investor can actually complete the transaction without paying any capital gains tax at all.

Right now, you may be imagining that the process is way too complicated to be worth it.  Or perhaps that the process must be terribly expensive if it will save you tens of thousands (in some cases hundreds of thousands) of dollars.  However, it's really not complicated at all and it's less expensive than you can possibly imagine (typically less than$1,000 regardless of the cost of the property).

We can help you buy or sell real estate using the 1031 tax deferred exchange.  The best part is that the process is simple and we will help you every step of the way.

Have investment property and want to sell it?

Want to buy investment property?

Contact us for more information.  You will be amazed how simple it can really be.