1031 Exchange California
Before mentioning the specific 1031 exchange California, let’s first understand the basic concept of a 1031 exchange. In a traditional sale of the property, a seller needs to pay capital gains taxes on any gain realized in the sale. One way that can be used to avoid paying capital gains taxes is to defer them by investing in a Section 1031 Exchange. As the name suggests, a 1031 Exchange contemplates an “exchange” of like-kind Property instead of a conventional sale. If the process qualifies, any realized gain is deferred until the replacement property is sold at a later date. One common misinterpretation is that property sold in California must be replaced by property in California; this is not true. The “like-kind” prerequisite is general and allows for an Exchanger to acquire property outside of California should they wish to do so.