In a tax-deferred exchange, you can trade one or more properties for other properties without paying federal income taxes right away. In many cases, you won’t have to pay state income taxes either. Normally, when you sell a property, you pay taxes on any profit you make. But with this kind of exchange, those taxes are delayed until you sell the new property in the future.
Exchanges can be done by individuals, trusts, corporations, partnerships, limited liability companies, or any other business entity.
