The most recent major tax reform that impacted 1031 exchanges was the Tax Cuts and Jobs Act (TCJA) of 2017. In this article, we are going to discuss what has changed in the world of 1031 exchanges since the TCJA was signed into law.
No More Personal Property Exchanges
In the realm of 1031 exchanges, the biggest change brought forth by the TCJA was the limiting of personal property exchanges. Prior to the TCJA, taxpayers could 1031 exchange personal property, such as aircraft, artwork, numismatic coins, and more. The TCJA effectively stopped personal property exchanges and limited section 1031 to exchanges of real estate held for investment or business purposes.
Today, you can only do a 1031 exchange of like-kind real estate (not personal property). Remember that any real estate used in a 1031 exchange must also be held for the purposes of investment or business. Your family home that you live in all year long would not be eligible for 1031 exchange treatment.
1031 Exchange Your Investment Property
1031 exchange your investment or business property and defer your associated capital gains tax burden. Section 1031 of the Internal Revenue Code is a powerful provision that is available for all US taxpayers to use. When done correctly, a 1031 exchange allows you to defer your capital gains taxes by reinvesting your net proceeds from the sale of your relinquished property into a new replacement property. It’s important to work with a qualified intermediary throughout the exchange process to ensure you are meeting all the requirements of section 1031. Work with a qualified intermediary at CPEC1031, LLC on your next exchange!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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