How a 1031 Exchange Works

A 1031 exchange, also known as a Starker exchange or a tax-deferred exchange, allows you to sell investment property and to defer capital gains and depreciation recapture taxes. This assumes reinvestment of 100% of the equity into "like-kind" property of equal or greater value. Any property held for investment purposes or for productive use in a trade or business generally qualifies as "like kind" property for 1031 exchange purposes.

1031 exchange rules require an investor to identify up to three potential "replacement" investment properties within 45 days of the close of escrow on their relinquished property. The acquisition of the replacement investment property (or properties) must be successfully completed within 180 days of close of the relinquished property.

In their 1031 exchange, many investors benefit from buying investment property as Tenants In Common (TIC) because it completes their exchange and can be closed in a timely manner due to pre-arranged financing.

For more information or to see if you may qualify for a 1031 Exchange call Patty Higgins Group team member Gerry Nassif at (727) 403 - 0086 or email at gerry.nassif@era.com.