The Section 1031 exchange allows investors to grow wealth faster while legally deferring federal income taxes. When you sell rental property without using a 1031 exchange, capital gains tax and depreciation recapture immediately reduce the cash you can reinvest. A properly structured exchange keeps all sale proceeds working for you. With a 1031 exchange, you can sell appreciated rental property, reinvest the entire proceeds of the exchange, and move into larger or higher-perf