Internal Revenue Code Section 1031 provides a means by which a property held for investment or income purposes can be sold (relinquished) and a replacement property acquired without paying any taxes. A Section 1031 exchange is also commonly referred to as “tax-deferred”, “tax-free”, “like- kind” or a “Starker” exchange. As a quick summary, under Section 1031, and subject to the “safe harbor” provisions contained therein, a taxpayer may exchange qualified commercial or investment property for other qualified commercial or investment property. Typically, in a non- simultaneous exchange, the taxpayer sells the property it no longer wants (the “relinquished property”) and purchases a “replacement property”. If the taxpayer then identifies up to three replacement properties within 45 days of the sale of the relinquished property, and settles on the replacement property within 180 days of the settlement on the relinquished property, the taxpayer can defer all capital gains tax. (Click on the tab Technical Aspects for a more detailed review of the Section 1031 requirements).

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