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Consider a 1031 Exchange: Exchange Basics: Article 7 of 8

Purchasing an investment property can be a complex process, so it's important to work with a team of experienced professionals to help guide you.

A 1031 exchange is a tax-deferred exchange of one investment property for another, which allows the property owner to defer capital gains taxes. Here are the basic steps to complete a 1031 exchange:

1. Identify a qualified intermediary: You'll need to work with a qualified intermediary who will hold the funds from the sale of your property until you're ready to purchase a replacement property.
   
2. Sell your property: You must sell your property to start the 1031 exchange process. The proceeds from the sale will go directly to the qualified intermediary.
3. Identify potential replacement properties: Within 45 days of selling your property, you must identify one or more potential replacement properties. These properties must be of equal or greater value than the property you sold.
4. Negotiate the purchase of a replacement property: Once you've identified potential replacement properties, you'll need to negotiate the purchase of one or more of them.
5. Complete the exchange: You must complete the exchange within 180 days of selling your property or by the due date of your tax return, whichever comes first. The qualified intermediary will transfer the funds from the sale of your property to purchase the replacement property.

It's important to note that a 1031 exchange can be complex and should be done with the help of a qualified intermediary and a tax professional. Not all properties are eligible for a 1031 exchange, so it's important to consult a professional before beginning the process.