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When you sell investment property, you do not
have to pay tax on the gain. Internal Revenue
Code Section 1031 provides a taxpayer with a
way to defer the payment of capital gains tax.
When a property used for investment or business
is sold, it can be replaced with a “like-kind”
property. (This transaction is also known
as a Starker Exchange or a Like-Kind Exchange.)
If you structure this exchange properly, you
can defer payment of the capital gains taxes
that would normally be imposed. These exchanges
provide great opportunities for investors to
preserve and grow their holdings.
Internal Revenue Code Section 1031(a) (1) states
that “No gain or loss shall be recognized
on the exchange of property held for productive
use in a trade or business or for investment
if such property is exchanged solely for property
of like kind which is to be held either for
productive use in a trade or business or for
investment.” |
