Why Exchange Instead of Sell?

When you do it right, a #1031 exchange allows you to defer paying all of the capital gains taxes, which equates to a long-term and interest-free loan from the IRS. Nice, right? In addition, you also have all your gross net equity available to reinvest so you can acquire bigger and better real estate. This would not be possible if you had simply sold outright. Why? Because you would have paid capital gains taxes on the sale.

So at the end of the day, the real advantage of a 1031 exchange is not deferral of capital gains (although that is a great thing, of course). It is the immediate increase in purchasing power generated by the tax savings. This allows you to jumpstart your real estate investment portfolio and move on to bigger and more lucrative properties faster.

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If a 1031 exchange is in your future, visit our website to learn more about these powerful tax deferral tools and our qualified intermediary and replacement property locator services.