How to save a million dollars in taxes (the basics of the 1031 exchange).
Real estate investments offer a number of tax benefits to its investors. IRS code 1031, also called as a like-kind exchange, allows for tax deferred sale of one investment or business property for the purchase of another. And there’s no limit to how often you can make this type of exchange, so you can make several profitable real estate investments, deferring capital gains indefinitely if you don’t cash out of the property. What are the rules? The two properties must be “like-kind business or investment properties. It doesn’t apply to a personal residence. Like-kind property can be any property held for productive use in a trade or business or for investment. Any type of investment property can be exchanged for another type of investment property. For example, a single-family residence can…