FAQs Archive - Page 2 of 4 - Horvath & Tremblay

Q: What are the benefits of a 1031 exchange versus a traditional sale?

A 1031 exchange allows real estate investors to sell a property and reinvest the proceeds into a new property without incurring immediate tax liability. This allows investors to defer capital gains taxes and potentially increase their cash flow, while also providing greater flexibility and more investment options. By completing a 1031 exchange, investors can keep 100% of their net proceeds available to reinvest in other like-kind (investment) replacement properties and reallocate, consolidate, or diversify their investment portfolio.

Q: Can I 1031 exchange into a Real Estate Investment Trust (REIT)?

No, you cannot complete a 1031 exchange into a Real Estate Investment Trust (REIT) as a like-kind replacement property. The IRS has specific rules about what types of properties qualify as like-kind, and a REIT is considered a different type of investment than a direct interest in real property.

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