1031 Exchange Benefits
TAX DEFERRED GROWTH
No other IRS approved benefit allows you to growth your equity and then transfer it to another qualifying proeprty without creating a taxable event. This is because the IRS views your tax deferred exchanging of like kind property as simply moving your cost basis from one qualifying investment property to another. In this way, your costs basis follows you throughout the entire investment life cycle. You can continue to exchange and growth equity for as long as you desire and when you do sell and have a taxable event, your capital gain tax will be assessed at that time.
Any investment property owner who intends to sell and buy another investment property should always consider a tax deferred exchange. To do otherwise would mean a dramatic reduction in buying power due to the 30 - 40 percent of equity whch could be lost to paying federal and state capital gain taxes.
One of the best benefits of tax deferred exchanging is the ability for an investment property owner to change their circumstances by replacing an underperforming property with another one which has better upside potential. This means you can you can continually refine and improve the performance of your property without penalty.