If you own a real estate investment property the IRS tax gods have given you one of the most powerful investing legal loopholes available... tax deferral of all capital gains when you dispose of an investment property.

What's the catch?  You have to roll your proceeds over into another investment property that meets the IRC's very liberal definition of like-kind property.  If you want to consider this real estate transaction further you need to know that at some point you will require the services of a Qualified Intermediary (QI) and an Exchange Accommodation Titleholder (EAT).

1031 Exchange Real Estate Transaction Benefits
If your investment situation meets the requirements of the IRC Section 1031 and satisfies the definition of "like-kind property" the advantages available to you are significant.  1031 tax exchanges allow real estate investors the flexibility to make better investment decisions on their real estate holdings without the issue of taxes clouding their investment judgment.  With a legal 1031 exchange real estate transaction you have many of the following benefits:

Tax Deferral of Accumulated Wealth
The ability to re-invest your equity wealth without tax consequences gives you the flexibility to upgrade your assets, rotate assets between other categories of real esate assets like commercial, industrial, and retail.  You also have the flexibility to upgrade into large properties in other regions of the country.

Increase Property Cash Flow
Upgrading into higher quality assets with greater cash flow potential can now happen without worrying about tax consequences on the transaction. In hot real estate markets the values can get significantly ahead of the available cash flow available from the property. In these situations it may make sense to lock in your capital gains.

Timing the Real Estate Markets
Speculating on the next hot segment of the market becomes much easier with the flexibility of a 1031 exchange real estate transaction.  Lock in your profits if your investment is located in a hot and rising market that is peaking in value and rotate into a lesser developed area that could become the next up-and-coming hot marketplace. 

Compounding and Stepping Up your Investments
Section 1031 of the tax code gives you the flexibility over time to engage in a series of transactions to continually reinvest your capital gains over time without tax consequences as you re-invest into larger and higher cash flow properties at each step-up.  Over time your wealth with grow faster as the tax provisions allow for your full capital gains to be re-invested without tax consequence, resulting in accelerated equity accumulation.