A 1031 Exchange, also known as a Like Kind Exchange or Starker Tax Deferred Exchange (named for an investor who challenged and won a case against the IRS) is a transaction under United States law which specifies that if an asset (usually some form of real estate such as land or a building) is sold and the proceeds of the sale are then reinvested in an asset of a similar kind (like kind asset), then no capital gain or loss is recognized, allowing the deferment of capital gains taxes that would otherwise have been due on the first sale. This law is defined under section 1031 of the Internal Revenue Code, 26 U.S.C. § 1031.

IRS rules control the length of time that the replacement property must be held before it may either be sold or used to enter into a new tax deferred exchanged. In highly appreciating markets, people may take the opportunity of selling their personal residence (where no capital gain is due below $250,000 for a single person or $500,000 for a married couple) and moving into a former rental property for a specified time period in order to turn it into their new personal residence, and thus avoid capital gains taxes.

REALTOR® Kathryn Petty-Tubman (S) is an 1031 Exchange expert on Maui. She understands the ins and outs of South Maui, specializing in the upscale communities of Wailea and Makena, adjacent to comfortable, vibrant Kihei and just 30 minutes from the Kahului Airport.

For more information on 1031 Exchange on Maui, don't hesitate to contact Kathryn Tubman at (808)276-3311. You can also browse our website and be sure to check back regularly for daily updated listings. Our website is userfriendly that offers a wealth of information on Maui real estate.

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