The carryover basis concept is pivotal in a tax-deferred exchange, wherein the adjusted tax basis of the property surrendered is used to determine the tax basis of the property acquired.
Like-kind property refers to properties that are of the same nature or character but may differ in grade or quality. In terms of taxation, like-kind properties can be exchanged without triggering immediate tax liabilities, typically under IRS Section 1031.
A real estate transaction entails a sale or exchange of reportable real estate for money, indebtedness, or property other than money or services, regardless of whether the transaction is currently taxable.
A tax-free exchange, often facilitated under Section 1031 of the Internal Revenue Code, allows for the exchange of one investment property for another while deferring capital gains taxes.
