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   A tax deferred exchange is simply a method by which a property owner trades one or more investment properties for other like-kind property without having to pay any federal income taxes on the transaction, and often with no state income taxes. In an ordinary sale transaction, the property owner is taxed on any gain realized by the sale of the property. But in an exchange, the tax on the transaction is deferred until some time in the future, usually when the newly acquired property is sold. The exchange rules allow owners of certain types of like kind real and personal property and buy other like kind of property. The like kind provision for real property is quite broad, and includes vacant land, rental and business real estate. Any of which, can be exchanged for the other. The like kind of provision for personal property is more restrictive. This type of property must be in productive use in a business (depreciable property) and can only be exchanged for the same type of property. An example would be commercial truck for commercial truck or business aircraft for business aircraft. A commercial truck for commercial car would not qualify. The rules also require that the Exchange use a safe harbor to hold the proceeds while the exchange is in progress. The only practical safe harbor for most Exchangers is a Qualified Intermediary. Best Exchange, Inc., is a Qualified Intermediary and is set up to assist you in making a smooth and easy exchange. Disclaimer: The information contained at this site is solely provided for information purposes and does not create a business or professional relationship. This web site is intended to provide basic information about I.R.C. Section 1031 tax-deferred exchanges and does not contain legal advice. Our attorney is licensed to practice law in Washington, while she may be able to assist with an exchange in other jurisdictions, you may still need to consult with an attorney licensed to practice law in your jurisdiction before making specific legal and tax decisions. Send questions, comments or feedback about this site to
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