If you’re interested in investment properties, and want to know what you owe as far as taxes are concerned, you’ll definitely want to know more about 1031 exchange properties. Under most circumstances, when you sell a property for the purpose of making a profit, the IRS takes a cut of these profits right away. However, when you’re working with 1031 exchange properties, the exchange is tax-deferred, so that you can roll over the gain from the sale from one investment property into another.
Before you start dealing with 1031 exchange properties, there are a few basic principles that you’ll need to understand. First, you should know that the purchase price of the replacement property must be equal to or greater than the net sale price of the property that you’re selling. All of the cash and any other proceeds that you receive from the sale of the property have to be used in order to purchase the replacement property. And, the properties that you’re buying and selling must be of ‘like-kind’, which means they need to be used for the same purpose.
