Accounting Articles > Real Estate Taxation:

1031 Exchange, Starker Exchange, Like-Kind Exchange, or Tax Free Exchange

A 1031, Starker, Like-Kind, or Tax Free Exchange is all the same concept under the Internal Revenue Service Code. Very basically its a trade of real property where the capital gain is deferred.

Example:

Let's say you have a factory building where your basis, you initially paid $300,000 for it. You're selling the property for $1,000,000. If you trade the difference, or roughly $700,000 into another piece of real property in an acceptable period of time, then you will not have to pay capital gains taxes. You are postponing the gain in the trade, and the money isn't going to you. When you ultimately sell the property without a trade, the gain will be taxed using the original basis.

These transactions are very complicated, technical, and not easy to accomplish. Contact our offices today. As highly experienced tax accountants practicing in the Chicagoland Area, we have successfully completed and accounted for more of these transactions than I can remember. Call or e-mail Accounting Solutions today.