Tax Deferred
The sale of a business or investment asset, whether it is real estate or capital equipment, can create a large tax liability. A properly structured tax deferred exchange under Internal Revenue Code ยง1031, however, allows businesses and individuals to defer the recognition of the capital gains or other taxes associated with the sale of most business or investment assets, as long as new assets are purchased to replace the existing assets. In general, most tax deferred exchanges are structured either as a real property or a personal property exchange. Real property exchanges include only interests in real property, while personal property exchanges encompass virtually all other types of property.
Diversified Porfolios
Exchanging from a larger building to several smaller properties to improve liquidity or to diversify ownership among several persons.
Consolidate or Leverage
Exchange from several smaller properties to a single larger building to sonsolidate ownership benefits.
Reduce risk
When the investor pays taxes on a sale, he/she will not have access to those funds again. This increases the risk of defaulting on an investment - especially leveraged investments.
