How 1031 Exchanges Work for Investors
A 1031 exchange, or Starker exchange, is named after Section 1031 of the U.S. Internal Revenue Code. It allows investors to defer capital gains taxes on the sale of investment property if the asset being sold is exchanged for “like-kind” property within a certain time frame. The “like-kind” nature of the properties simply means that the asset must be real property, held for productive use in a trade or business, or an investment property. The investor cannot use a primary residence, vacation home or interest in a real estate fund in a 1031 exchange. However, the properties being exchanged don’t have to be in the same asset class. For example, an investor can sell vacant land and exchange the proceeds for an apartment building. We offer investors access to Origin Exchange, our 1031 exchange program.