A tax-deferred exchange is an approved method of selling investment properties and acquiring
one or more like-kind properties without paying any federal capital gains taxes whatsoever. Most states
allow favorable capital gains tax treatment. When such an exchange meets the criteria of the IRS Code Section
1031 and the regulations promulgated by the IRS, the taxes are deferred until sometime in the future. For
investments held by individuals, the deferral can continue through any number of exchanges until the tax
liability is extinguished by death.
