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Contact EXIT Team Realty

If you have any questions or need more detailed information, please feel free to contact us via phone at 401.349.5000 or fill out the form to let us know how we can help with your real estate needs.

Office Location

375 Putnam Pike Ste 35,
Smithfield, RI 02917
Phone: (401) 349-5000
Fax: (401) 349-5099

1031 Taxed Deferred Exchange

A 1031 tax deferred exchange allows you to roll-over all of the proceeds received from selling real estate as an investment property into the purchase of one or more other like-kind investment properties. At closing, proceeds are transferred to a third party who is called a facilitator or qualified intermediary. They are who holds them until they are used to acquire the new property.

A 1031 exchange is often referred to as a Starker exchange, or simply flipping properties.

Exchanges allow you to delay capital gains taxes. Capital gains taxes are deferred if all of the exchange funds are used to purchase like-kind investment property. The deferment is like getting an interest-free loan on the tax dollars you would have owed for a cash sale. The more equity that is retained helps you move into properties of higher value each time you perform a 1031 exchange.

A 1031 exchange is possible when you sell real estate held for investment purposes. It cannot be used for the sale of your personal residence. Exchanged properties must be like kind. For a real estate exchange this means real-property for real-property, but not necessarily land for land or a rental house for another rental house. Take a look at the IRS rules for specific information about what types of properties qualify as like kind. You can exchange a single property for multiple properties, or purchase one property from the proceeds of several. Proceeds not used to purchase new investment property are taxed as a cash sale. "In a like-kind exchange, both the property you give up and the property you receive must be held by you for investment or for productive use in your trade or business." -IRS

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