Discover the truth about the 1031 exchange. This episode tackles a common misconception: that it helps you avoid income tax. Brad Hovis and Drew McCabe explain the difference between capital gains tax and income tax. Learn the six essential rules for a successful exchange. Find out why this real estate strategy is a powerful tool for building wealth.
Key Takeaways- A 1031 exchange defers capital gains tax; it does not help you avoid income tax.
- Depreciation recapture is a tax that you must pay when you sell a property.
- The government incentivizes 1031 exchanges to stimulate economic activity.
- You must follow six specific rules to complete a 1031 exchange successfully.
- A qualified intermediary is required to hold funds during the exchange process.
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