1031 exchange regulations

A 1031 exchange allows real estate investors to defer paying capital gains taxes when they sell one investment property and reinvest the proceeds into a similar property within a specific timeframe. To qualify, the properties must be of like-kind, and the replacement must occur within 180 days. The process involves using a qualified intermediary to hold funds, ensuring the investor doesn't take direct receipt of the money. This strategy helps investors grow wealth without immediate tax burdens, but strict rules and deadlines must be followed to maintain the tax deferral benefits.