A tax-deferred exchange allows you to preserve your wealth through reinvestment in "like-kind" assets. It's a powerful tool-a tool that can work to your financial advantage.
When you sell your interest in investment property, you may incur federal capital gains taxes and, in some states, state taxes as well. Your attorney, tax advisor, or real estate professional may suggest a tax-deferred exchange under Section 1031 of the Internal Revenue Code. This allows you to dispose of investment properties and acquire "like-kind" properties while deferring federal capital gains taxes. Most states with a capital gain tax offer a similar tax advantage, too. Bottom line: a tax-deferred exchange allows you to reinvest sales proceeds that would otherwise be paid to the government in the form of taxes.
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Community Title Agency, Inc.
