Net lease glossary
1031 Exchange
A tax-deferral strategy under IRC Section 1031 that lets investors reinvest real property sale proceeds into like-kind property without recognizing gain.
A 1031 exchange, named for Section 1031 of the Internal Revenue Code, allows an investor to defer capital gains and depreciation recapture tax when selling real property held for investment or business use and acquiring like-kind replacement property. Since 2018 it applies only to real property. The investor must use a qualified intermediary, identify replacements within 45 days, and close within 180 days. Net lease properties are popular replacement assets because they require little management.