What is a Like-Kind Exchange, and What Does It Mean for Your Taxes?

The most common way to profit from owning a piece of real estate is by selling the property for more than you paid, often because the property’s value has appreciated or increased over time.

Fortunately, there is a way to cash out on a property and avoid a hefty capital gains tax bill: Section 1031, or a “like-kind exchange,” allows you to defer or postpone capital gains tax liability on the transaction.

To learn more about 1031, or like-kind exchanges, and what they mean at tax time, continue reading below.

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