Exchange Explained


Exchange Explained

The internal revenue code or exchange is an effective tax deferral strategy available to taxpayers. This code allows for a rollover of equity of like commercial properties, through an exchange, to take place without requiring the payment of capital gains taxes on the initial investment. The theory behind internal revenue code is that when a property investor has reinvested the sale proceeds into another commercial property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer's investment is still the same, only the form has changed (e. g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a paper gain.

Contact a specialist today for a more thorough explanation and for advice relating to your personal circumstances.

Popular tags