The most common question upon hearing about Exchanges for the first time is “If this is so beneficial then why isn’t everyone doing it?” The simple answer: a lot of misconceptions and a lack of planning. There are structures that allow exchangers to purchase vacation homes, retirement homes, and under some very special circumstances, the ability to combine an exchange with a primary residence. Although most people think about exchanges only in conjunction with commercial or industrial property, there is a huge need for exchanges when dealing with residential properties as well. A 1031 Exchange allows owners of business or investment property to defer the recognition of the capital gains tax normally due upon the sale of the property so long as they use the proceeds to buy another business or investment property of equal or greater value.
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