Understanding Tax-Saving Strategies with Sec. 1031

ARTICLE | July 07, 2025

Tax obligations often loom large when deciding to sell appreciated real estate. With property values rising in many areas, property owners and investors may feel it’s an opportune time to sell. However, transferring ownership through a traditional sale can trigger a substantial tax burden. This is where Section 1031 of the Internal Revenue Code becomes especially important. Utilizing a Sec. 1031 exchange can permit you to defer capital gains taxes by reinvesting in another qualifying property, potentially preserving a significant portion of your real estate wealth. In the following discussion, we explore how Sec. 1031 exchanges work, identify the strict requirements you need to follow, and consider how these strategies can be implemented successfully.

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