1031 Starker Exchanges

Written by Linda Alexander
Bookmark and Share

To keep cash flowing and to keep the real estate market alive, Congress encourages Americans to invest in real estate. They allow us to defer capital gains payments from the sale of investment property when we use the proceeds to purchase more investment property. By following certain rules and time limitations, any real estate investor can do this. It is known as a Starker exchange.

Starker exchanges are known by different names. They were named after T.J. Starker, who challenged the IRS in the 1970s in a famous case, and won the right to delay paying capital gains taxes. His victory led to Section 1031 of the Internal Revenue Service tax code, which is why the name 1031 exchange is also used. They are also called tax deferred exchanges, like kind exchanges, and tax free exchanges (although you will eventually have to pay the tax).

Professionals to Assist with 1031 Starker Exchanges

Professionals abound in this field and there are experts who can locate qualifying real estate to meet your exchange needs. You just let them know what type of property you are trying to sell and what you would like to replace it with, and they will find suitable buyers and sellers for you. Since the IRS requires you to go through a qualified intermediary to perform the swap, it is to your advantage to get professional advice.

You can swap properties through a Starker exchange for any real property, including art collections, licenses, and aircrafts, as long as it is held for income generation or investment. For example, you cannot use your primary residence in the trade. Still, if you invest in art collections, real estate, or other valuable equipment, trading up through a Starker Exchange is a great way to grow your wealth and defer your taxes until you sell it at a profit.

Bookmark and Share