| If you are a real estate investor who is about to sell a | | | | course, have to pay capital gains tax on your profit. If, |
| property and use that money to purchase more real | | | | however, you take advantage of the 1031 Exchange |
| estate, make a 1031 Exchange instead of just selling | | | | and reinvest the money from your sale in another real |
| outright. | | | | estate property, you can defer the capital gains tax. |
| Making every dollar work for you compounds your | | | | The second investment property will appreciate over |
| wealth. Anytime you don't compound your wealth, you | | | | time, compounding your wealth. Also, the extra money |
| have missed an important opportunity. A 1031 | | | | you save on the capital gains tax can be used to |
| Exchange offers you one of these | | | | leverage loans against the second property at anytime |
| wealth-compounding opportunities. Don't ignore it. | | | | in the future. Those loans can be used to make other |
| When you sell a property, you have two basic options. | | | | profitable investments that will compound your wealth |
| First, you sell the property outright, take your profits | | | | even more. |
| and pay capital gains tax on them. Second, you could | | | | A 1031 Exchange is available on any real estate you |
| sell your property under a 1031 Exchange and not pay | | | | are holding for investment purposes. It can even be |
| the capital gains tax for the foreseeable future. | | | | used for particular sorts of personal property |
| There is a provision under section 1031 that allows you | | | | considered as a business investment. You can do a |
| to defer your capital gains taxes while your wealth is | | | | 1031 Exchange on construction equipment, like a |
| compounded by investing the income produced by | | | | bulldozer. If you collect antique cars, you can do a 1031 |
| deferring the capital gains. | | | | Exchange instead of an outright sale. If you collect |
| Let's say you own a small real estate investment | | | | airplanes, a 1031 Exchange is a practical application, as |
| property. You have kept and maintained the property | | | | well. What really decides the matter is the large |
| for a number of years and now you want to sell and | | | | amount of capital gains involved in the sale of these |
| collect on your investment. You are probably | | | | types of properties. You cannot do a 1031 exchange |
| considering making an outright sale and pocketing the | | | | on interest accrued from a Real Estate Investment |
| profits or redistributing them somehow. You will, of | | | | Trust or money from the sale of stock. |