1031 Exchanges

A 1031 EXCHANGE is a useful tool for a taxpayer to defer payment of capital gains and depreciation recapture taxes on the sale of property, as long as that taxpayer uses the proceeds from the sale to reinvest in a like kind replacement property. This makes more funds available to the property owner to put toward the replacement property, and has been compared to receiving an interest free loan toward purchase. Who wouldn’t want that? That “interest free loan” will likely increase with growth of the investment property and in additional exchanges, since there is no limit on the number of 1031 Exchanges that can be executed.

Moreover, the tax liability only lasts over the lifetime of the taxpayer. The taxpayer’s estate will never have to pay back the taxes that were deferred. The inherited property will have a stepped up basis to fair market value at the time of the taxpayer’s death.

Robert Bichoupan, Esq. is a Qualified Intermediary (QI) who assists with 1031 Exchanges by (1) acquiring the relinquished property from the taxpayer and transfer it to the buyer, (2) holding the exchange proceeds while the taxpayer searches for a property, and (3) acquiring the replacement property and transfer it to the taxpayer.

Prior results do not guarantee a similar outcome. All information posted is general advice only, based upon the rules of NYS, and is not intended to be a substitute for personal legal advice. Although information provided here was accurate as of the date of posting, laws change frequently and rules in other jurisdictions may differ. Therefore, readers should not rely upon these postings but should consult an attorney to discuss their specific factual situation.