provision of the Federal Income Tax Code that permits companies and individuals to exchange property of a like-kind without incurring any liability for paying capital gains tax dues.
Memories of family and home
Tuesday, October 7, 2008
1031 Exchanges
I was wondering what a 1031 Exchange was and when I went to this website, I found plenty of information. It's a
provision of the Federal Income Tax Code that permits companies and individuals to exchange property of a like-kind without incurring any liability for paying capital gains tax dues. Now, did I understand that, of course not. So, I had to read further and find out just exactly what it was all about. 1031 Exchanges do not generate cash, so it is unfair on the taxpayer to ask him or her to pay tax on unrealized gain or “paper” gain. They are trading even and there is no gain, which is considered a "boot". Should there be property trade that one gains more profit that they gave, then there's a "boot" and it's not a like-kind trade.
provision of the Federal Income Tax Code that permits companies and individuals to exchange property of a like-kind without incurring any liability for paying capital gains tax dues.
