Due to the dwindling economy, some people are forced to sell their homes. However, when the house is sold, they also have to pay taxes. However, if your family badly needs money right now, there are few techniques available to postpone taxes. One of this is 1031 Exchanges.

Section 1031 is the provision of the Federal Income Tax Code that permits companies and individuals to exchange property of a like-kind without incurring any liability for paying capital gains tax dues.

So if a person does not generate cash, he won’t be subject to pay taxes on unrealized gain or “paper” gain. So what’s the benefit of 1031 Exchanges? Since you won’t have to pay the taxes right away, you can use the money instead for another purpose, such as investing it to another property.

Another good thing about 1031 Exchanges is that, it is not necessary that the properties in an exchange should be located within the same state.