When selling a property, instead of paying taxes on it, and then using the reduced after-tax proceeds to buy other real estate, the IRS allows the deferment of capital gains tax which would have been owed on the sale of that property. The amount not paid in capital gains tax to federal and state governments creates increased equity in your investment. Tax deferment, therefore increases the availability of your money which can be invested into better property(s) of greater value. Tax deferment is leverage and leverage creates wealth. By using a Qualified Intermediary (Accommodator) to transfer both properties and funds, rather than you doing so directly, your tax liability is deferred.
Eastland Escrows has an affiliated corporation that handles 1031 exchanges, D & S Services, Inc. For more information. Please call 626 967-7274, or email us at firstname.lastname@example.org.