Section 1035 Exchange Law and Legal Definition

Section 1035 exchange is a class of financial transaction in which a life insurance or annuity policy is replaced for a new one without any taxable event. There are several classes of exchanges under Section 1035 of the Internal Revenue Code. Section 1030 group of exchanges is a series of tax codes that applies to the tax free situations. This code enhance policy holder to continue to reinvest all of their gains into new properties. The seller gains the incentive by exempt to pay a tax from the capital gain of the property.