What Are the Benefits of Exchanging Vs. Selling?

1. A section 1031 exchange is one of the few techniques available to postpone or potentially eliminate taxes due on the sale of qualifying properties.

2. By deferring the tax, you have more money available to invest in another property. In effect, you receive an interest-free loan from the federal government, in the amount you would have paid in taxes.

3. Any gain from depreciation recapture is postponed.

4. You can acquire and dispose of properties to reallocate your investment portfolio without paying tax on any gain.

5. Like-kind exchange transactions offer excellent avenues for deferring capital gains taxes.

6. ANY taxpayer who owns investment or business property should consider this technique before selling property. 

Some Reasons to Exchange Properties

1. To exchange non-productive real estate for income-producing real estate.

2. To move the location of a business or rental property.

3. Exchange to more desirable investments.

4. Leverage equity in old property to increase real estate portfolio values.

5. Retirement planning.

6. Estate planning.

For additional information on the benefits and process of 1031 tax exchanges, click here to view reports from Investors Title Exchange Corporation.