For the last couple years, the volume of 1031 tax-deferred exchanges was very low in comparison to the last decade. There is now a resurgence in the amount of 1031 exchanges being opened and completed in the last 6 months. A typical 1031 exchange was of a single family home that was used as a rental property. This home had a few hundred thousand dollars in equity and was being sold to trade up into a single tenant NNN investment - less hassles, less tenants, more cash flow. When the single family home market drop starting in 2007, the equity in these rental properties dropped off and an exchange was no longer warranted.
Now, some 2 years after Silicon Valley's bottom (March 2009), equities are coming back and there is now a renewed need for the 1031. Also, some investors who bought at the bottom in 2009 and 2010, are looking at newly created equity which also suggests rolling equities to a new property via the 1031.
The rules have not changed much and are still very favorable for an investor to leverage his equity into a new investment property, while deferring capital gains taxes.
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