Section 1031 of the Internal Revenue Code allows an owner of investment property to exchange property and defer paying federal and state capital gains taxes (20%+ applicable state taxes) if they purchase a "like-kind" property following the rules and regulations of the Internal Revenue Code. This allows investors to use all of their proceeds from their sale to leverage into more valuable real estate, increase cash flow, diversify into other properties, reduce management or consolidate into one property.
"Like-kind" property can include, but is not limited to, any of the following, provided it is held for investment:
Single-family rental
Duplex
Apartment
Commercial Property
Raw Land
For example, a single family rental can be exchanged for raw land, or apartments or a commercial building. Most 1031 tax deferred exchanges are not simultaneous, but are delayed whereby the Exchanger has 180 days between the closing of the sale of the relinquished property and the closing of the purchase of the replacement property. Potential replacement properties must be identified within 45 days from closing on a relinquished property.
There are also circumstances when one might purchase a replacement property prior to the sale of the relinquished property, called a "reverse-exchange."
Always discuss a 1031 tax deferred exchange with your tax and/or legal advisor first. I am happy to provide you with additional information on the subject, and refer you to specialists who can answer all of your questions. Just ask!
- NUMBER1EXPERT™ 
