I am selling a rental property to buy another rental property. I found the below article online. Does this still apply? How to we go about it if it does?
If you own real estate for a business or investment and you sell it, then quickly buy other real estates, you can defer paying capital gains tax on the initial sale until you sell the new property. This procedure is called a like-kind exchange or, after the section of the tax law that enables it, a 1031 exchange.
The rules around this procedure are somewhat precise, so it is important to make sure you do it in accordance with the law to avoid owing unnecessary tax. Generally, you must have the proceeds of the sale of the initial property transferred to a qualified intermediary rather than receiving cash for sale. Then, you must designate the desired replacement property in writing to the intermediary within 45 days of the sale and close on it within 180 days.
The 1031 exchange generally applies only to business and investment real estate, not your primary home. As of 2018, the 1031 exchange is only used for real estate, not for other investments like securities or artwork.
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