One widely used tax strategy among real estate investors is the “like-kind” exchange, often called a 1031 exchange after the Internal Revenue Code section that allows this tax treatment. A 1031 exchange enables taxpayers to defer capital gains taxes when they sell investment or business properties. A proposal to limit such deferrals faces an uncertain future in Congress this year, but even if it is not enacted there are other circumstances that can make a 1031 exchange impractical or inappropriate.
Here is a brief overview of alternative strategies for managing the tax consequences of a property sale. (more…)