Benefits of a 1031 Exchange

While 1031 exchanges provide immediate tax deferral, the real power of exchanges are in the many short and long-term investment and business objectives they can help you accomplish. Some examples of the many benefits include:

• Defers capital gains, depreciation recapture and could help avoid the 3.8% Net Investment Income Tax and Alternative
• Minimum Tax (AMT) so all of your other income is taxed at a lower level
• Time value of deferred gain allows the deferred gain to keep appreciating
• Greater buying power
• Increase cash flow
• Less management responsibility
• Diversification of investments (types of property or their locations)
• Consolidation of properties
• Relocation or expansion of business
• Exit strategy for business owners
• Acquisition of property to eventually be converted into a personal use property
• Estate preservation as tax may be forgiven upon death and heirs receive stepped up basis