The 1031 Exchange Institute

Welcome to The 1031 Exchange Institute™. The 1031 Exchange Institute is your complete online resource for 1031 exchange, 1033 exchange, 1034 exchange, 721 exchange, 453 installment sale and 121 exclusion information.  Information will also be provided regarding Self-Directed IRAs, including Traditional IRAs, ROTH IRAs, SEP-IRAs and SIMPLE IRAs. 

The 1031 Exchange Institute is dedicated to educating and informing real estate investors and their advisors on the benefits of 1031 tax-deferred exchanges and other tax deferred and tax exlcusion strategies so they can make better informed investment decisions.

The Structured Sale

Generally, a capital gain tax will be recognized and capital gain tax paid upon the sale or exchange of an asset that has appreciated in value, including real estate or personal property. There are numerous tax deferral strategies available that can defer or even eliminate capital gain taxes upon the sale of property with the proper tax planning. 

Exclude Capital Gains

There are few options available that will completely exclude or eliminate capital gains taxes.  The Charitable Trust might be an option, but the Charitable Trust is permanent once established and put into operation. 

Defer Capital Gains

There are more options available to defer the payment of capital gain taxes than there are to exclude the payment of capital gain taxes.  However, there can be some really creative solutions designed with careful capital gain tax planning.  I have outlined below the more popular capital gain deferral tools available today.

1031 Exchange

The most popular tax deferral strategy today is by far the 1031 Tax Deferred Exchange.  However, the 1031 Tax Deferred exchange requires that a like kind replacement property be acquired during very specific time constraints in order to defer the payment of capital gain taxes.

Installment Sale

Real estate, or any type of asset for that matter, can be sold using a seller carry back note or seller financing.  Depreciation recapture tax is generally recognized in the year of the sale and the capital gain tax is generally deferred over the term of the installment sale promissory note.  The actual capital gain tax is recognized and paid as principal payments are made to the seller. 

Structured Sale

A relatively new tax deferral concept is the Structured Sale.  The Structured Sale can be a tremendous tax deferral solution when there is no desire to acquire like kind replacement property as part of a 1031 Tax Deferred Exchange transaction.  It can be especially effective with the sale of property or assets that are difficult to 1031 Exchange such as business interests. 

Capital gain taxes are triggered with a Structured Sale.  The Structured Sale merely defers the payment of the capital gain taxes into the future over a pre-determined time period determined upfront by the seller.