Section 1031 is only available to businesses. When a business sells a property and uses the gains from the sale to purchase a new property, the transaction is treated as a “like kind” exchange. Tax is not levied on the sale, rather, the cost of the original property replaces the cost of the new property. This is a tax deferral mechanism, and the Capital Gains Tax will be levied if the business ever sells a property and does not purchase a new one with the gains.

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