1031 tax-deferred exchanges have been used by investors as the most powerful tools to create and preserve real estate wealth. Tax-deferred exchange is a structured process allowed under Section 1031 of the IRC. It states generally that a property investor may trade one property for another like-kind property without having to pay capital gain tax on the transaction.

Section 1031 specifies a strict set of rules that must be adhered to for an exchange to be compliant. Using a Qualified Intermediary such as Equity 1031, LLC is one of the major requirements of a 1031 tax-defered exchange. Unfamiliar even by most tax and financial advisors and real estate professionals, this powerful provision of the IRS tax code allows owners of investment or business property including raw land to sell their property without incurring immediate capital gain tax liability, when another replacement like kind property is purchased.

Having the ability to sell property without the occurrence of any capital gain tax liabilities empowers real estate investors many investment possibilities. Using 1031 exchange, the property owner may be able to do any of the following:

• Reinvest in larger properties
• Reinvest in newer properties
• Diversify investments
• Change investment mix
• Increase cash flow
• Plan for retirement
• Accumulate wealth
• Relocate investments