Like-Kind Exchange (Section 1031)
A tax-deferred exchange of investment or business real property for similar property under IRC Section 1031, deferring capital gains recognition.
Detailed Explanation
Since the Tax Cuts and Jobs Act, Section 1031 applies only to real property held for investment or business use, not personal property. Strict deadlines apply: replacement property must be identified within 45 days and acquired within 180 days of the sale of the relinquished property. The transaction is reported on Form 8824. Boot (cash or non-like-kind property received) is taxable. Reverse and improvement exchanges add complexity and require qualified intermediary involvement.
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Learn about Tax Planning & StrategyRelated Terms
Capital Gain
The profit realized from the sale of a capital asset such as stock, real estate, or cryptocurrency, taxed at preferential rates if held longer than one year.
Tax Basis
The amount of investment in an asset for tax purposes, used to determine gain or loss when the asset is sold or otherwise disposed of.
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