Real estate investors are allowed to sell one home with the intention of rolling the purchase funds over to purchase another like-kind property for further investing. This allows the investor to move up in investment value without having to cash out and pay taxes each time a property is sold.
The 1031 like-kind exchange is a valuable tax-saving tool and a great benefit to any investor. It is a relatively simply transaction to perform. However, the requirements for eligibility should be strictly followed, or the transaction may be disallowed or carry tax consequences. You should speak with a tax professional if you have specific questions about your situation.