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Exchange benefits Preservation of Equity A properly structured exchange provides real estate investors with the opportunity to defer 100% of both Federal and State capital gain taxes. This essentially equals an interest-free, no-term loan on taxes due until the property is sold for cash. Most often the capital gains taxes are deferred indefinitely because many investors continue to exchange from one property to the next, dramatically increasing the value of their real estate investments with each exchange. Leverage Many investors exchange from a property where they have a high equity position into a much more valuable property. A larger property produces more cash flow and provides greater depreciation benefits, which therefore increase an investor’s return on their investmen5t. Diversification Exchangers have a number of opportunities for diversification through exchanges. One option is to
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