1031 exchanges have been around for nearly 100 years. In this article, we are going to offer a brief history lesson on the origins of the 1031 exchange.
How 1031 Exchanges Came to Be
The origins of the 1031 exchange date back to the early 1920s. Since 1921, there have been Internal Revenue Code provisions that allow taxpayers to swap property in tax-free transactions. 1031 exchanges have survived all major overhauls of the Internal Revenue Code (1939, 1954, 1986, and 2018) and are still alive and well to this day.
Starker & Non-Simultaneous Exchanges
But most modern 1031 exchanges are not simultaneous property swaps. Rather, the majority of 1031 exchanges are set up as “delayed” exchanges, in which a taxpayer sells their relinquished property and then acquires their replacement property at a later date. This type of exchange was solidified in the landmark case Starker v.United States, 602 F.2d 1341 (9th Cir. 1979), which was the first instance in which a taxpayer completed a delayed (or deferred) exchange.
1031 Exchanges Today
1031 exchanges are still commonly used as a way to defer taxes on the sale of real estate. They are great for investors, as well as the economy as a whole!
1031 Exchange Services
At Commercial Partners Exchange Company, we have two decades of experience working with clients on their 1031 exchanges of real estate. We help our clients defer their capital gains taxes under section 1031 of the Internal Revenue Code. Our qualified intermediaries work directly with you throughout the process – preparing your documents, advising you on property decisions, and answering all of your questions along the way. Contact us today to learn more about our services or to set up a time to chat with one of our intermediaries about your exchange.