Capital gains, in the context of real estate, refer to the increase in the value (appreciation) of a property over time. When the property is sold, the difference between the purchase price and the sale price represents the capital gain.

Reinvesting those capital gains back into real estate is known as a 1031 exchange, named after Section 1031 of the U.S. Internal Revenue Code. This provision allows an investor to defer paying capital gains taxes on an investment property when it is sold, as long as another “like-kind property” is purchased with the profit gained by the sale of the first property… continue reading

Source: DSCRLender.com

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