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Term Trading
When was the idea of a 1031 Exchanges developed?
In 1921 the first exchange laws were enacted. Changes have been made, but it wasn't until 1991 when the Regulations were made available that this concept of dispositions has become very popular. The theory is that if one does not cash out of an investment, the economic gain has not been realized in a way that produces the cash to pay the tax.
What is the term trading up?
It is adding money to an exchange and acquiring an even more expensive piece of property than you sold. Or, you can increase your debt, but you must use all of the proceeds from the relinquished property as well.
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