Jerry Taylor explains how 1031 exchanges let real estate investors defer capital gains taxes by reinvesting into a replacement property of equal or greater value. You can repeat exchanges throughout your lifetime, and heirs get a step-up in basis at death that eliminates the tax. The catch: you have 45 days to identify the replacement property and 180 days to close.
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If you're a real estate investor, you've got to know about 1031 exchanges. By using 1031 exchanges, you can increase the size of your estate and avoid paying taxes on your investments. You can continue buying properties and defer any capital gains tax that would be due on the sale of the property. Before I get there, go to my profile page, Linktree, and sign up for my newsletter. Say you have a piece of property that's increased in value by $500,000. Going through the 1031 exchange process, you can defer the capital gains tax that would otherwise be due on the profit from that sale. You do that by buying another piece of property of equal or greater value. And you can keep doing this until you die. Then at your death, your heirs will receive a step-up in basis on that property and they will not pay any tax on it if they sell it. There are strict timeframes associated with doing this. You have to identify a piece of property that you're going to buy within 45 days of the original sale. And you have to close on that property within 180 days. It is an incredible way to increase the value of
