For most investors, commercial real estate involves financial leverage. Many of these investments increase in value due to market growth and added improvements, such as enhanced aesthetics, new structures, or securing high-paying tenants. To take advantage of this increased value, investors often sell their properties and reinvest in larger or more profitable opportunities. However, selling these investments typically triggers capital gains taxes. Fortunately, the government provides plans that allow investors to defer paying these taxes.

Enter the 1031 Exchange

This is where the 1031 Exchange, also known as a Starker Exchange or Like-Kind Exchange, comes into play. Defined under Section 1031 of the Internal Revenue Code (IRC), this option allows real estate investors to shift their investment focus without immediately incurring tax liability. Instead of paying taxes on the sale, investors can reinvest the proceeds into a like-kind property and defer the taxes.

Why Use a 1031 Exchange?

There are several vehicles available to defer tax liability based on an investor’s overall strategy. The 1031 Exchange is a popular choice because it provides flexibility in managing real estate portfolios. By selling one property and purchasing another, or multiple properties, investors can grow their portfolios while postponing capital gains taxes.This article also touches on another vehicle for tax deferral: the Delaware Statutory Trust (DST).Ready to start your 1031 Exchange? Schedule a Free 1031 Exchange Consultation.


Need assistance with your 1031 Exchange or DST? We’ve got you covered!We’ve prepared a comprehensive, free e-book designed to guide you in achieving your long-term business goals or acquiring that dream property you’ve been eyeing.
Meet The LeveragedCRE Investment TeamPhill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets. The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.Stay informed with the latest in Commercial Real Estate strategies designed to enhance your income property investment results by bookmarking www.leveragedcre.com. Let us help you stay ahead in the market!