Like-Kind Exchange (1031)
TaxGlossary term
Definition
A tax strategy that allows investors to defer capital gains taxes by exchanging one investment property for another of equal or greater value. Strict timelines apply: 45 days to identify replacement property and 180 days to complete the exchange.
Related terms
- Capital Gains TaxA tax on the profit from selling an asset that has increased in value. Short-term capital gains on assets held less than a year are taxed as ordinary income, while long-term gains on assets held over a year receive preferential lower rates.
- Tax-Deferred AccountAn investment account where taxes on contributions and earnings are postponed until money is withdrawn, typically in retirement. Examples include traditional IRAs and 401(k) plans, which allow investments to grow without annual tax drag.
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