When the great majority of people think about a 1031 exchange or something like NNN properties, they naturally think of real-estate, although there are several different names for the exchange, such as a 1031 property exchange and other terms utilized in different areas. One of the largest points of confusion many people have is the difference between the kinds of exchanges, when actually it simply goes by many different terms. People who have been doing them for years may not even use the 1031 label at all.
The 2 most common terms are the 1031 exchange and the 1031 property exchange. Sometimes the exchange can also be called a 1031 deferment exchange. The number 1031 comes from the US Treasury Regulations and the Internal Revenue Code sections that explain this kind of exchange. The section in both those sets of codes and regulations is number 1031.
Of the most-used names that don’t use the 1031 designation, you might hear the exchange called things like a deferred or tax deferred exchange, or a like kind exchange. Two the names that are less obvious are terms like a starker or delayed exchange. All of these refer to the common 1031 property exchange, though there could be slight differences.
In the different names for this transaction, some kinds of exchanges could have subtly different procedures and processes, but the ultimate result will always be the same: the sale of a property that’s tax-deferred due to the purchase of like kind property with those funds. This does not often need to be property, as there are many different types of property that may be exchanged in this fashion. But regardless of the terms, the exchange is to all intents and purposes the same.
Inside those terms, there are a bunch of variations, as well. Many other terms take the essential idea of like kind exchange for tax deferment and allow some variations to give the chance to finish the transaction in a wide variety of circumstances.
Learn more about 1031 investments and the differing types of 1031 investment property exchanges you might use to defer capital gains taxes at 1031investmentopportunity.com.