The 1031 Exchange, Explained:

The 1031 Exchange is quite possibly the most powerful investment tool available to property owners. ‘Exchanging’ gives investors the ability to move from investment to investment, whether it is real estate, heavy equipment, business assets, artwork or aircraft, while keeping their equity intact. IRS Code 1031 allows investors to defer paying both Federal and State capital gains taxes and depreciation recapture when they sell a investment property and buy another investment property of “like kind” through an exchange transaction. Thus, investors can buy the property they want and build their wealth faster by utilizing the exchange process.