Many people wonder if their property qualifies for 1031 exchange treatment. There are a variety of factors that define what is and is not eligible for 1031 exchange. In this article, we are going to outline the basic property rules in a 1031 exchange.
Real Property
All property involved in any 1031 exchange must be real property. Years ago, 1031 exchanges could be conducted with items of personal property, but Congress restricted 1031 exchanges to real estate back in 2018.
Like-Kind Property
All property involved in any 1031 exchange must be “like-kind.” In the United States, most real estate is considered like-kind to most other real estate. The definition is quite broad for 1031 purposes. If you are selling and acquiring real estate that is held for business or investment purposes, it likely falls under the “like-kind” category.
Investment or Business Property
All property involved in any 1031 exchange must also be held for investment purposes or for use in your business. Property that is primarily held for personal use (like your family home for example) is excluded from 1031 exchange.
Start the 1031 Exchange Process
If you are ready to start the 1031 exchange process, the first thing you should do is reach out to a qualified intermediary to discuss the details of your exchange. At CPEC1031, LLC our intermediaries can help you determine if your property is a good fit for 1031 exchange treatment, and assist you throughout the process. We have decades of experience working on like-kind exchanges under section 1031 of the Internal Revenue Code. Let us put that experience to work for you on your next 1031 exchange. Contact us today at our Minneapolis office to set up a time to talk.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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