How to Dodge Taxes (Legally) with a 1031 Exchange!

A 1031 exchange (named after Section 1031 of the Internal Revenue Code) is a tax-deferral strategy used by real estate investors to defer capital gains taxes when selling an investment property and reinvesting the proceeds into another "like-kind" property.

How It Works:

1. Sell Your Investment Property
2. Identify a Replacement Property
3. Acquire the Replacement Property
4. Tax Deferral

Key Benefits:

• Tax Deferral – You postpone capital gains taxes, allowing more capital to grow.
• Portfolio Growth – You can upgrade to larger or more profitable properties.
• Wealth Building – You can continue exchanging properties indefinitely, building a real estate empire tax-efficiently.
• Estate Planning Advantage – If you hold the property until passing, your heirs receive a step-up in basis, eliminating capital gains taxes.

Like-Kind Property Examples:

• Allowed:
• Single-family rental → Multifamily apartment
• Commercial building → Industrial warehouse

• Not Allowed:
• Investment property → Primary residence
• U.S. property → Foreign property
• Stocks, bonds, or personal property

When to Use a 1031 Exchange:

• You want to defer taxes and reinvest profits.
• You want to scale to larger properties.
• You’re consolidating or diversifying assets.
• You want to transition markets without tax burdens.

MORE INFO:

https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips

D. Voight Thornton, MBA is an Certified Debt Consultant?Mr. Thornton was born in Incirlik Turkey (Adana AFB Base), and grew up in the Southwest (New Mexico). He earned his M.B.A. in Business Administration, Technology Management, while working as an Licensed Mortgage Loan Officer. His interest in the finance lead him to relocate to Arizona, to further his career,?Since graduating, Mr. Thornton? has worked in multiple compliance domains including his FinTech background. Mr. Thornton is licensed in Mortgage and as a certified Debt Consultant in the United States.