There are nice advantages to purchasing a property using the 1031 Exchange aw. These tax advantages allow one to use the money in total, rather than having to give a portion of it to the State. The disadvantage comes when the money would not be gained, but rather lost. In such an event, this money cannot be counted as a loss because of the 1031 Exchange law, which is supposed to prevent such losses. There are many reasons a property could lose value, everything from vandals to new construction. These losses though must be eaten by the purchaser.