Internal Revenue Code 1031 Tax Deferred Exchange

Under section 1031 of the united states internal revenue code 26 u s c.

Internal revenue code 1031 tax deferred exchange.

What is section 1031. In a 1031 exchange the seller of appreciated property may exchange appreciated. Tax deferred exchanges what is a 1031 exchange irs code 1031 allows real property to be exchanged for other real property without the immediate payment of capital gains tax. Section 1031 is a provision of the internal revenue code irc that allows business or investment property owners to defer federal taxes on some exchanges of real estate.

1954 as amended by subsection a shall not apply in the case of any exchange pursuant to a binding contract in effect on march 1 1984 and at all times thereafter before the exchange. 1031 a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property a process known as a 1031 exchange in 1979 this treatment was expanded by the courts to include non simultaneous sale and purchase of real estate a process sometimes called a. Generally if you make a like kind exchange you are not required to recognize a gain or loss under internal revenue code section 1031. Paragraph 2 d of section 1031 a of the internal revenue code of 1986 formerly i r c.