A 1031 Exchange is a tax-deferred exchange of ‘like-kind’ investment real estate. It can create a tax savings to leverage into a greater property investment. The process allows you to avoid paying capital gains taxes and depreciation recapture when you sell and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value.
Typically, in Arizona this type of transaction is handled by a title-company related specialized division who handles both the sale of the original investment property and the new purchase or purchases. There are companies licensed in multiple states who can support a cross-state sale and purchase.
Example: selling a small commercial office building in California, and buying four (4) single family homes to rent out in Arizona. There is flexibility on what types of property you can roll into keeping the tax benefit intact.
There also is a way to turn your primary residence into a rental property, still taking out your Section 121 tax-free gain, then rolling into a 1031 exchange.
I would be happy to discuss options, strategies and guidance on 1031 Exchanges, as well as provide contacts to Exchange professionals to facilitate the transactions.