The main benefit of swapping property instead of selling it is to avoid having to pay taxes on the profit that is made on the sale. When you defer these taxes it allows you to have more money to invest in new property which in turn makes it easier to sale and purchase new property. In the past the only way for an investor to defer taxes on property would be to swap out with someone else. This could prove to be very difficult. You had to find another investor that had "like kind" property that would be willing to trade for your property. This property had to then be swapped simultaneously which made this task almost impossible. There are many reasons why an investor would want to sell the real property they have and relocate their business in a new area. They may be looking for a location that can increase their cash flow or simply move to a more desirable location. When investors sell their property they have to pay taxes up to forty percent of the amount of their capital gain, this in turn makes it difficult for them to purchase new property. When investors choose to exchange their property instead of selling it they can defer these taxes. This is where the section 1031 exchange ruling that was put into effect on June of 1991 comes into play. It is a way for investors to sell their property and replace it with a new one without paying the taxes on the equity they earned. Instead all of the capital gain they made can be placed on the new property. It gives the investor time to locate and purchase their new investments. Regardless of the reason an investors has for making this type of change the most profitable way to do this is by exchanging the property instead of selling it.