 A
1031 tax-deferred exchange offers strong benefits that
translate into investment savings.
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.
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