Courtesy of Steve Lewis
- A 1031 exchange allows investors to defer capital gains taxes by reinvesting in like-kind properties.
- Steve Lewis, a part-time real estate investor, ran into a lot of red tape when attempting to do one.
- Ultimately, he felt rushed during the 1031 exchange process, which involves two strict deadlines.
A 1031 exchange sounds great on paper: It allows an investor to sell a property without paying capital-gains taxes on the sale if they replace it with another property of equal or greater value.
You could theoretically defer capital gains taxes indefinitely if you continued exchanging for what the IRS calls "like-kind properties."