What is a 1031 Exchange?

A 1031 exchange is a swap of one real estate investment property for another that allows capital gains taxes to be deferred — it is a deferral and not an exemption of paying taxes.  1031 gets its name from Section 1031 of the IRS tax code.

QUICK TIPS
• A 1031 exchange is a tax break. You can sell a property held for business or investment purposes and swap it for a new one that you purchase for the same purpose, allowing you to defer capital gains tax on the sale.
• Proceeds from the sale must be held in escrow by a third party, then used to buy the new property; you cannot receive them, even temporarily.
• The properties being exchanged must be considered like-kind in the eyes of the IRS for capital gains taxes to be deferred.
• If used correctly, there is no limit on how frequently you can do 1031 exchanges.
• The rules can apply to a former principal residence under very specific conditions.

Watch Interview with Real 1031’s Exchange Advisor — Grant Hauver

Source:
https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx