I'd like to sell some investment property. Can I avoid paying capital gains?
With a little planning, you could avoid paying capital gains taxes if you complete a 1031 tax deferred exchange. The Internal Revenue Code (IRC) Section 1031 allows a property owner, who holds property for “the productive use in a trade or business or for investment”, to defer paying any capital gains taxes if such property owner, in accordance with the provisions and requirements of Section 1031, sells such property, identifies like kind property within 45 days and acquires other like kind property within 180 days.
The IRS has also recently issued Revenue Procedure 2000-37 which allows you to perform a "reverse exchange". This allows a taxpayer to acquire the new property before selling the old property.
As always, we recommend that you contact a tax professional for specific advice on your particular situation!

Posted By: Colleen Starr on Thursday, February 11, 2010