A Deferred Exchange, often termed as a Delayed or Tax-Free Exchange, refers to a real estate transaction facilitated under Section 1031 of the Internal Revenue Code, allowing the deferral of capital gains taxes on the sale of an investment property, provided another like-kind property is acquired within a specific timeframe.
Under Section 1031 of the Internal Revenue Code, like-kind property used in a trade or business or held as an investment can be exchanged tax-free.
Assets considered to be of the same nature and character, even if they differ in quality or grade, which can be exchanged under Internal Revenue Code Section 1031 to defer capital gains taxes.
A realized gain refers to the financial gain generated from the sale or exchange of a property, though this gain may not always be subject to immediate taxation. In cases of tax-free exchanges, such as under Section 1031, the gain is realized but not recognized for tax purposes.
Recognized gain is the portion of a realized gain that is subject to taxation in a so-called tax-free exchange, such as under the IRS Section 1031 rule.
A reverse exchange is a strategic real estate transaction where the buyer acquires a new property before relinquishing their old property, often to meet IRS Section 1031 requirements.
Section 1031 of the Internal Revenue Code allows for tax-deferred exchanges of certain types of property, enabling the deferral of capital gains taxes under specific conditions.
A Tax-Free Exchange, also known as a Tax-Deferred Exchange, is a real estate transaction that allows investors to defer capital gains taxes on the sale of an investment property by purchasing a similar property under IRS Section 1031.
