The 1031 Exchange Rules You Need to Know

Taxes are an inevitable part of investing in real estate. You can, however, defer or avoid paying capital gains taxes by following some simple rules of a 1031 exchange. Yes, you read that correctly!

An apartment building that could be used in a 1031 exchange rises up against a blue sky.
(Image credit: Getty Images)

Investing in real estate can be a highly profitable enterprise. Unfortunately, real estate investors know that it comes with the same cost as most other forms of investment: taxes. Fortunately, unless Congress changes the 1031 exchange rules, which have been in existence for more than 100 years, there is a way for savvy real estate investors to defer payment of capital gains taxes indefinitely: the 1031 exchange.

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Daniel Goodwin
Chief Investment Strategist, Provident Wealth Advisors

Daniel Goodwin is a Kiplinger's contributor on various financial planning topics and has also been featured in U.S. News and World Report, FOX 26 News, Business Management Daily and BankRate Inc. He is the author of the book Live Smart - Retire Rich and is the Masterclass Instructor of a 1031 DST Masterclass at Daniel regularly gives back to his community by serving as a mentor at the Sam Houston State University College of Business. He is the Chief Investment Strategist at Provident Wealth Advisors, a Registered Investment Advisory firm in The Woodlands, Texas. Daniel's professional licenses include Series 65, 6, 63 and 22. Daniel’s gift is making the complex simple and encouraging families to take actionable steps today to pursue their financial goals of tomorrow.