Tax-Deferred Exchange

A tax-deferred exchange, often called a like-kind exchange, allows real estate investors to sell one property and buy another without immediately paying capital gains taxes on the profit. The taxes are deferred until the new property is sold in the future. This process helps investors reinvest more of their money into new properties, encouraging growth without an immediate tax burden. To qualify, the properties must be similar in nature, and the exchange must follow specific guidelines set by tax authorities. This strategy is mainly used to defer taxes and facilitate ongoing investment in real estate.