1031 Exchange Real Estate

Lots of people selling real estate investment properties think that you must pay capital gains when selling your property, but this is not always the case. saving-you-money

IRS Code Section 1031, offers real estate investors the opportunity to reinvest the capital gains (profit) from the sale if you exchange that property for another property.

It doesn’t necessarily need to be “Like Property” either!

If you are planning to sell an investment property that you own, you really should think about using a 1031 tax deferred exchange.

It will allow you to defer 100% of both Federal and State Capital Gains Tax.

1031 Exchanges allow the investor to reinvest their capital gains in another property, where the principal may continue to grow through future exchanges.

1031 exchange

Enabling the “Exchanger” to keep more Capital to reinvest and to minimize tax liability, when the real estate transactions are well structured and completed correctly.

Together with the help and advice of an Experienced Realtor, such as those at Nance & Associates, Realtors to help you locate a great investment property, can make a great investment strategy!

Still interested?

Some facts that you should know

  • Originally, 1031 exchanges were to “Exchange Like Properties” to the same Individual/Entity, but that is not the situation any longer.
  • You should know that “Like Properties” once meant. Duplex for Duplex, Single Family House for Single Family House, Vacant Land for Vacant Land, etc. The rules have been expanded to allow you to exchange an investment condominium for an investment townhouse for instance.
  • A common misconception is that only large-scale investors can use a 1031 tax deferred exchange. The great thing about 1031 exchanges is that it can apply to a variety of investment properties. It works the same way for an investor selling an apartment complex as it would for an investor selling a rental house.


The information contained herein has been obtained through sources deemed reliable but cannot be guaranteed as to its accuracy.  Any information of special interest should be obtained through independent verification.

This information is general in nature and is for general informational purposes only, and should not be construed as legal or tax advice or a substitute for legal or tax professional counsel.



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You can learn more from the following link
Internal Revenue Code section 1031
on the exchange of certain types of property, a process known as a 1031 exchange. In 1979, this treatment was expanded by the courts to include non-simultaneous

Real Estate Investing Tips


You have most likely seen the multiple infomercials with a wealthy investor that is offering their sure-fire real estate investing system. Renovated Home

They usually go on and on about their rock-solid no money down rags-to-riches real estate investment course with easy
payments that total thousands of dollars (but only if you call right now because quantities are limited) and now you are probably thinking, “wow this looks like a great deal, I better order it quickly before the special offer expires. Notice how there’s always a special offer and/or a limited time offer? Anyway, I am not saying that this person isn’t telling the truth, he or she may have had success using their “Real Estate System”. Regardless of which course or school of thought you buy into there are several key areas that should be similar and an investor needs to be aware of when engaging in any real estate related transaction.

real estate investing

Number 1: Don’t Overpay for the property

The whole point in investing is to find properties that are undervalued. How does one find out what is undervalued versus overvalued? Without getting into too many technical details, the bottom line is you need experience. Yes, much like shopping for anything else, you need to know what similar properties are selling for. It’s advisable to stick with one market, perhaps the one closest to you in proximity as a starting point.


Number 2: Competitionreal estate investing

Yes, you are actually going to have competition. Do you think that you are the only one seeing those infomercials!


Number 3: Do renovations that count

You need to reach a point where the beauty and the payoff balance out. This one really should be common sense, though, but properly executing it can be very difficult for some. How can you do this? Well, there are many ways. Make upgrades to the property that people actually care about. Kitchen and baths are always good starts! Though not all upgrades will automatically raise the value of the home. Don’t be a cheapskate and repaint old appliances and/or put dented, used appliances and think people are not going to realize. Granite countertops on worn old cabinets is also a no-no. Remember to think in terms of what the market wants, not what you personally want. This is an investment, not your personal residence. You aren’t the one buying it to live there; you are trying to sell it to someone else for a higher price than you bought it.


real estate investingNumber 4: Know Your Budget
It may be fine going through your life on a whim, but real estate investing is serious business, and thus diligent financial planning and budgeting is critical to your success. You don’t need to be a finance geek, however you need to be disciplined and know your budget from the onset, or you may be finding you are learning that you need to make certain renovations or upgrades, and didn’t anticipate it going over to a certain cost and now you are stuck between properly renovating the property and cheaping out on the rehab. Think ahead as to what is needed before actually going forth with investing in real estate.


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Nance & Associates, Realtors
433 Elm St, Fredericksburg VA 22401
Office (540) 373-7474
Office Hours
Monday-Friday 09:00am - 5:00pm
Saturday 10:00am - 4:00pm
Sunday 11:00am - 4:00pm

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