Key insights 1031 exchange refers to IRS tax code section 1031, which details how to do a “like-kind” exchange of an investment property. 1031 exchanges avoid capital gains taxes by trading ...

If you follow the rules governing 1031 exchanges, you can defer paying capital gains tax on the one-bedroom unit. And you can do it whether you own the property as an individual or business entity.

In the summer of 2024, Jose Palafox took advantage of a little-known tax strategy called a DST 1031 exchange, which allows investors to avoid capital gains tax on the sale of a rental property.

The 1031 exchange, while advantageous, is bound by stringent regulations set forth by the IRS. To qualify for this tax-deferral strategy, you must meet specific criteria and follow certain rules.