A powerful tool for "selling"(exchanging)one investment property for another or several.If done properly you can defer the capital gains tax until you die and your heirs inherit your investment property at the future market value and all taxes are wavied.

Section 1031 of the IRS CODE states that property which qualifies for TAX DEFERRAL is any form of Real Property used in a trade or business or held for investment. Any form of investment real estate or any real estate housing your business qualifies. Tax is not due until the "REPLACEMENT PROPERTY" is eventually sold. There is no limit to the number of exchanges an investor can do, making it possible to defer CAPITOL GAINS taxes indefinetly.

l) You can avoid paying capital gains on your investment property and you keep 100% of your equity working for you, rather than giving up 20% to 30% to Uncle Sam. This allows you to roll all your equity over when it makes sense and allow all of your equity to compound into a much larger amount of money over time.

2) You can move property geographically If you are transferred or relocating due to job transfer or retirement you can acquire property close to your new home by using the exchange process.

3) You can increase your cash flow by exchanging from one property to another. An investor who owns raw land with no income and typically a negative cash flow can exchange it for income producing property. Or you can trade a poorly performing property for one with a better cash flow.

4) You can improve your investment appreciation. You may want to forego current cash flow for a property that you think has the potential to increase greatly in value.

5) You can sell multiple properties and exchange into one larger property to reduce management and accounting work. Others prefer to diversify their investments by owning multiple properties. Either of these goals can be accomplished through exchanging.

6) You can eliminate management hassles by exchanging from time intensive properties like a shopping center or multiple single family properties into a single tenant warehouse.

Almost all exchanges are done on a "DELAYED" basis. That is you "sell" one property and then you find a replacement property in the qualifying time period of 45 days from the first closing. You then have up to 180 days to actually close on the replacement property.

ACCESS TO ACCUMLATED EQUITY IS AVAILABLE BY REFINACING: (A NON TAXABLE EVENT)