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Do I permanently escape tax? |
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No; not unless you die. The like-kind exchange rule is a tax-deferral technique. The new property purchased with the proceeds from the sale of old property has the same low tax basis as the old property. When the new property is later sold, the original deferred gain, plus any additional gain realized since the purchase of the new property, is subject to tax. Of course, one can sell the new property as part of another like-kind exchange and continue to roll over.
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