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What you describe does happen, unless they use that transfer process described, but by doing so they reduce the effective cost basis of the new property by the difference between the cost basis of the old one and the sale price.


Yeah the 1031 exchange simply defers the tax to a later time. But if you defer it until you die, your heir (in many cases) gets off tax-free.


Yeah, I guess the unintended? consequence here is that the lack of a time window allows indefinitely propagating it, maybe the exchange should come with a time window phase out.




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