Transfer Of TitleTaxes

Transfer Of Title Practice Question

Under federal tax law, a 1031 exchange allows investors to:
A
Avoid all taxes on real estate sales
B
Defer capital gains tax by exchanging like-kind investment properties
C
Deduct the full purchase price of a property
D
Convert rental income to capital gains
Explanation

A 1031 exchange (like-kind exchange) allows investors to defer capital gains tax when selling an investment property by reinvesting the proceeds into another like-kind property. The tax is deferred, not eliminated, and strict timing rules apply.

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