In general, Section 1031 of the Internal Revenue Code allows a property owner to exchange one property for another and defer payment of capital gains tax, as long as both properties are "like-kind." "Like-kind" property is property that must be either held for investment or held for productive use in trade or business. To have a completely tax deferred exchange; the Exchanger must acquire a replacement property of an equal or greater value than the relinquished property. This means that one must transfer all of the proceeds into the replacement property and obtain an equal or greater loan.
For more information about 1031 exchanges, contact Investment Property Exchange Services, Inc. - www.ipx1031.com, a member of the Fidelity National Financial Corporation's Group or visit www.1031alliances.com a member of WFG National Title Insurance.