Can you utilize a 1031 exchange by selling property and applying the deferred taxes to another property you already own?

Welcome back to another Real Estate Minute with Ilyce Glink, where I answer viewer questions and offer my tips and advice for how to navigate the real estate market.

Today’s question comes from a couple that owns two homes. They’re selling a home they’ve been renting out to tenants, and they’re looking for a way to minimize their capital gains tax exposure on that property. Under certain specific circumstances, a 1031 exchange (also known as a likekind exchange or Starker exchange) could offer the savings they’re seeking. A home seller is allowed to defer capital gains taxes by replacing the property sold with the purchase of another property that meets the stipulations laid out in section 1031.

To find out what the specific requirements are for a 1031 exchange and why this couple won’t qualify for one, watch today’s Real Estate Minute.

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