Strategies by using 1031 Exchanges Use these tax saving strategies! Using, the 1031 tax-deferred exchange is widely known and utilized by investors to defer capital gains tax when selling and buying investment property (Not familiar with 1031 Exchanges? Click here to learn about the basics of 1031 Exchanges.) To qualify under IRC Section 1031 the basic requirements to maximize your tax-deferral are: There are, however, additional tax savings
Overview So, what is a 1031 exchange? When you sell an investment or income-producing property, you will be required to pay capital gains taxes on that sale. (The current capital gains rate is either 15 or 20 percent.) If you would like to use the proceeds from the sale to invest in replacement properties, you’ll find that the tax debt has reduced your buying power.