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.
