Deferred Gain 2019-02-25 08:00:00

Deferred Gain

In a tax-deferred exchange, the deferred gain is the amount of gain that escapes current taxation and is deferred until a later date.

For example, if an investor bought a property for $1,000,000 and claimed $100,000 in depreciation during ownership, the investor would have an adjusted basis of $900,000 ($1,000,000 purchase price less $100,000 depreciation).

Assuming the investor later sold the property for $1,200,000, the investment would be subject to capital gains tax on the $300,000 gain ($1,200,000 sales price less $900,000 adjusted basis). However, the resulting capital gains taxes may be deferred by completing a 1031 exchange.


1031 Exchange Guidebook

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The 1031 Investor's Guidebook