What is a 1031 tax exchange?

Question: What is a 1031 tax exchange?

Answer: You can sell one property & exchange it for another, rolling your gain from one to the other.Both the old & new property must be investment properties, not your primary residence. Typically investment properties are income property, single family, or land. You can sell any of these and buy another.

Example: you can sell a duplex & purchase a single family home.

From the date of closing escrow on the sale of your old property, you have 45 days to produce a list of properties you would like to purchase. It should contain at least 3 potential properties. Also from the date of closing, you have 180 days to close escrow on the purchase of your new property which must be named on the list. You can not touch the money.

Comments

[Joanna Barnes]

This was exactly the explanation I needed, as I've been researching this topic extensively. Concise and to the point, thanks for the quick reference!