Business owners and real estate investors in the Mid-Atlantic who understand the benefits of a 1031 exchanges can acquire better performing investment properties and defer paying capital gain taxes. Since 1921, IRC Section 1031 allows business owners and investment property owners to defer capital gain taxes when virtually any real property held for investment or used in a business is exchanged for other “like-kind” real property. Taxes which would otherwise be due in a taxable sale are deferred until property is sold for cash at a later time. Essentially, a 1031 exchange provides business owners and real estate investors an interest-free loan that can be used over and over to exchange into better performing investment properties and build significant equity. Via a 1031 tax deferred exchange, real estate investors can defer up to four levels of taxation including depreciation recapture at 25%, federal capital gains at 15%/20%, state capital gains tax (Maryland ranging from 4.75% up to 5.75% with 3.20% local tax and Virginia 5.75%), and the 3.8% 1411 Net Investment Income Tax, when applicable.