"103 1 tax extension law" is named according to the first item of the first paragraph of article 103 1 of the US tax code. The law stipulates: "If the exchanged property is used for the productive use or investment of an enterprise, and the property is used for the exchange of similar assets, the gains and losses of economic interests in the exchange process will not be recognized." In short, taxpayers do not need to pay federal income tax on transactions if the income from the sale of property (whether investment or commercial property) is used to buy similar property.
Let's take American real estate as an example. Buyers don't have to pay capital gains tax while selling an investment property, and then use the remaining net income to buy other properties. Instead, the total sales revenue is used to invest in new real estate, and there is no need to pay capital gains tax at present. Of course, this does not mean not paying taxes, but postponing the capital gains tax to be levied after the new house is produced. We can see that "103 1 tax extension method" can make investors delay paying capital gains tax, thus promoting the growth of investment portfolio and improving the overall investment income.
Therefore, as long as the regulations of the IRS are strictly observed, the capital gains from the sale of the property will be delayed. This is a wise tax and investment strategy and real estate planning tool. In theory, investors can continue to delay the capital gains of investment properties until they die, which may eventually be completely avoided.