What is a 1031. Basically, a tax deferred exchange is an intrest-free loan from the government compliments of Section 1031 of the Internal Revenue Code. Under Section 1031, a taxpayer may, in some instances, completly defer payment of taxes by trading rather than selling his or her real estate. They are available to owners of investment property or property used in a trade or business.
Minimal cooperation is needed from other parties involved in the exchange.
However, the tax rules and consequences can be serious, so investors interested in an exchange should consult their legal or tax advisor before proceeding.