A 1031 exchange refers to the section of IRS code that spells out the law and specific requirements regarding “like-kind” transactions. In short, when selling real property that’s held “for productive purposes,” the IRS says that, as long as the investment proceeds are rolled into a similar investment within a specific time frame, “no capital gain or loss shall be recognized.”
In other words, any profits from the sale would not be subject to capital gains taxes.

But to qualify for the tax break, you need to follow specific rules. Interested in a 1031 exchange? Here’s what you need to know.

• 1. The new property must be of like kind
• 2. You have a limited window to select and purchase a new property
• 3. You must use a 1031 qualified intermediary