Section 1031 Real Property Exchange

A Section 1031 Real Property Exchange allow a seller to postpone paying tax on the gain if the seller reinvests the proceeds of the sale in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under Section 1031 is tax-deferred, but it is not tax-free. The term refers to Internal Revenue Code Section 1031, which provides this exception to the realization of capital gains from the sale of real property.