When you sell real estate used for investment purposes or commercially, and reinvest in a new property, you have to pay income taxes on the realized profit. That’s when the 1031 tax deferred exchange comes into use. The 1031 tax deferred exchange allows you to use the profits made from the real estate property you sold for a new property to acquire your next properties. A great opportunity, is it? 1031 tax deferred exchange is only able to be used for investment and income property, not for your personal use on property you want to buy for yourself and family. In order for you to be able to use the 1031 tax deferred exchange you must adhere to the following:
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