Solomon Lander, eHow Contributor, defines it like this:
A Section 1031 Exchange allows you to sell a property and purchase a replacement property without having to pay capital gains tax on the transaction. Because you are just changing one property to another without actually receiving your equity back, it is not considered a gain.If you are looking to to a 1031 Exchange for acreage in Wisconsin and have questions, contact our Broker Roy Burlingame and be sure to visit BuyWisconsinLand.com and check out beautiful wooded properties.
Read more: What Is a 1031 Exchange Transaction? | eHow.com http://www.ehow.com/facts_7940194_1031-exchange-transaction.html
Solomon is correct, a 1031 exchange postpones or delays the payment of capital gains taxes until the sale of the replacement property. Another exchange can be initiated to continue delaying the payment given the new property is equal to or greater in value than the old property. The tax obligation never goes away. The take away is that those taxable dollars are used interest free towards purchasing the replacement property.
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