Understanding a 1031 Exchange

The IRS Code reads:

“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like kind, which is to be held either for productive use in a trade or business or for investment.”

What it means:

Section 1031 of the Internal Revenue Code states that upon the sale of a property, the investor can use the funds from the sold property to purchase another similar property and not be liable for any capital gains taxes on proceeds from the initial property.