The Basics of 1031 Exchanges – Part One.
A 1031 exchange is a method to defer the payment of capital gains tax on commercial property. It involves a sale procedure where an owner sells a property and reinvests all of the sales proceeds into a new one, using a third party intermediary to complete the transactions. Within 45 days after the closing of the first property, the seller must identify the replacement property or properties that will be purchased. Then within 180 days after the closing of the first leg of the 1031 exchange, the purchase of the replacement property must close. Next: What type of properties qualify.