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1031 Exchange?

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Exchange Basics

There is some confusion regarding what type of property qualifies for a Section 1031 tax deferred exchange. The Internal Revenue Code Section 1031 states that “no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.” Like-Kind Property can include, but is not limited to, any of the following, provided it is held for investment:

- Single Family Rental
- Duplex
- Apartment
- Commercial Property
- Raw Land

For example, a single family rental can be exchanged for raw land, or apartments or a commercial building. In addition, properties can be exchanged anywhere within the United States.

Why Exchange?

  • Improve investment performance 

  • Change property tax

  • Consolidate

  • Diversify

  • Life transition

  • Relocate

  • Change tenants

  • Change management

  • Defer maintenance

Real Property Eligible for 1031

  • Land

  • Timberland and timber deeds

  • Rental property

  • Hotels/Motels

  • Commercial Buildings

  • Conservation Easements

  • Mineral, Oil & water rights

  • 30 year Leasehold interest

  • Ranches & Farms

We love to hear from our clients and the feedback we receive from assisting them with their projects. 

 

The IRS regulation “1031” provides specific tax benefits for investors, whereby selling one property and then purchasing another within 180 days can be treated as an exchange, versus a sale that would be treated as capital gains income.

 

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Tel: (281) 723-7500

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