Deferred gain refers to the amount of gain that is realized but not recognized at the time of a transaction, commonly occurring in tax-deferred exchanges, often known as 1031 exchanges. Essentially, deferred gain allows taxpayers to defer paying taxes on capital gains by reinvesting the proceeds in like-kind properties.
A Delayed (Tax-Free) Exchange refers to a transaction where an investment property is traded for another like-kind property, allowing for the deferment of capital gains taxes as stipulated by IRS guidelines.
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 multiple exchange is a tax-free exchange in which more than one property or more than two parties are involved. This type of exchange allows for a series of transactions that enable parties to swap properties or interests to achieve their desired outcomes without generating a taxable event.
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 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.
