A 1031 exchange, named after a section of the Internal Revenue Code, allows you to keep all of the proceeds from the sale of your property as long as you invest them in a like-kind property. That means any property held for productive use of trade, business or investment can be exchanged for any other property held for productive use in trade, business or investment.

You can change the form of your investment without (as the IRS views it) cashing out or recognizing a capital gain. That allows your investment to continue to grow tax-deferred. There is no limit on how many times or how frequently you can do a 1031. Although you may have a profit on each swap, you avoid tax until you actually sell for cash in the future.

By placing an easement under the asset site (which can simply mirror the existing easement, if there is one), your ground lease sale turns into a real property sale, generally making it eligible for a 1031 exchange. An easement does not affect your ownership of the land, including your ability to sell it.

• Preserves all of the equity in a property
• Increases your purchasing power, allowing you to buy a more
  expensive property than if you had to pay capital gains tax
• Diversification of your investments without paying an immediate
  tax consequence

IMPORTANT TAX NOTICE: Landmark does not provide advice on any income tax, capital gains tax or other tax requirements or issues related to any transaction in which Landmark is a party or participant in any fashion. Use of any information obtained from Landmark or its affiliates or agents or referral by Landmark or its affiliates or agents is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for tax questions and assistance. The information above is provided as a general introduction to the 1031 exchange process. Prospective sellers and buyers of real estate should always consult their attorney and tax advisor prior to entering into a 1031 transaction.