Simply stated, a 1031 Exchange is a rollover of equity of like properties. Under section 1031 of the Internal Revenue Code, a taxpayer may completely defer payment of taxes by trading, rather than selling his or her real estate. A 1031 exchange is an opportunity for the seller and buyer of investment property, or property used in a trade or business, to save in taxes and leverage income growth. Selling a business or investment property typically requires payment of capital gains taxes. The tax bill can be heavy depending on the property's appreciation in value and length of time depreciated.
Taxpayer finds another property that fits their needs.
Taxpayer buys replacement property through the Intermediary. The parties may not know each other and their properties can be in different states. The properties do not have to close at the same time. The Intermediary should be financially strong with knowledge to make the transaction hassle and worry-free. You may want to search for a Realty Exchange Corporation.