A 1031 tax deferred exchange is a strategic method for selling one property and buying another property within a particular time frame so as to save up on tax which you would have to incur if you just sold a property and didn’t buy one.

This is different from a sell and a purchase, in a practical situation it would result in the same thing but technically it would classify as an exchange instead of a sale. This allows the taxpayer to qualify for deferred gain treatment. To put it more simply we can say that the sales are taxable and exchanges are not.

To get more help on this you can see the 1031 Tax Exchange Services provided by Nationwide1031.com. You can see all details regarding the basics of the 1031 Tax exchange, Basic rules and more information which will clear up your doubts when it comes to Tax Deffered Exchanges.

Lendings to stable financial entities such as large companies or governments are often termed “risk free” or “low risk” and made at a so-called “risk-free interest rate”. This is because the debt and interest are highly unlikely to be defaulted. A good example of such risk-free interest is a US Treasury security - it yields the minimum return available in economics, but investors have the comfort of the sure expectation that the US Treasury will not default on its debt instruments. A risk-free rate is also commonly used in setting floating interest rates, which are usually calculated as the risk-free interest rate plus a bonus to the creditor based on the creditworthiness of the debtor (in other words, the risk of him defaulting and the creditor losing the debt).

However, if the real value of a currency changes during the term of the debt, the purchasing power of the money repaid may vary considerably from that which was expected at the commencement of the loan. So from a practical investment point of view, there is still considerable risk attached to “risk free” or “low risk” lendings. The real value of the money may have changed due to inflation, or, in the case of a foreign investment, due to exchange rate fluctuations.

The Bank for International Settlements is an organisation of central banks that sets rules to define how much capital banks have to hold against the loans they give out.