A Tax-Deferred
Exchange was first introduced in 1921 allowing owners of
investment property to defer the payment of capital gains
associated with the sale of those properties.
In the
summer of 1990, this procedure was finally outlined under
the Internal Revenue Code section 1031, and involves a
series of rules and regulations that must be met in order to
take full advantage of this tax benefit. These new rules
allowed owners of certain types of like kind Real and
Personal property to sell their property and other like kind
property without paying the Capital Gains Tax. The rule also
required that the "Exchanger" use a safe harbor to hold the
proceeds while the exchange was in progress, and spelled out
what the safe harbors were. The only safe harbor for most "Exchangers"
is a "Qualified Intermediary." A Qualified Intermediary has
a complete understanding of everything that is involved in
utilizing this section of the code and will walk you through
this process.
