If you own rental property and want to sell it to buy other property, you may want to consider a 1031 exchange. It allows you to not pay taxes because it treats your sale and purchase as an exchange rather than a sale. There are certain rules and requirements that have to be followed, such as the exchange must occur within a certain time period.
The U.S. Internal Revenue Service has recently given property owners some leeway in how they use their properties, according to Nationwide Exchange Services in Chicago. Owners may make personal use of the properties for 14 days or up to 10 percent of the time of the 12 months before sale and still do a 1031 exchange.
Feb. 20, 2008