A completed 1031 exchange not only defers capital gain and depreciation recaptures taxes, it dramatically increases your buying power as well. The IRS allows you to defer your capital gain taxes because they view it as simply moving your costs basis from one qualifying property to another.
DETERMINING YOUR REPLACEMENT VALUE
It is important to understand how the underlying math can impact the value of your Replacement Property. For instance, this nearby wizard will help you determine your ideal net purchase price, cash down payment and the amount of debt you’ll need to have a totally tax deferred transaction.