This is a real estate tax deferment where you can essential defer the capital gains tax that you would have to pay when you sell a certain piece of real estate and buy another (not your primary residence). No money is changing hands so you're not cashing out, so the government gives you a break.
Note that this is a highly complex transaction and should never be done without a lawyer who has done it before.
Many experienced real estate investors do this for decades paying no taxes and constantly trading up to larger and more complex real estate deals. Think of it kind of like a tax deferred IRA for "like-kind" real estate.
In the end they either sell out or live off the rental income. These deals aren't easy, but they can save you a ton of taxes!
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