1031 exchanges of real estate can be complex, but we do our best to simplify the process whenever possible. In this article, we are going to strip the 1031 exchange down to its most basic elements for easy consumption.
1031 exchanges are also commonly known as “like-kind” exchanges. That’s because all property involved in a 1031 exchange needs to be like-kind, as designated by the IRS. Thankfully, like-kind is pretty simple when it comes to real estate, as most real property is considered like-kind to most other real property.
Investment or Business Use
Another important thing to remember is that your 1031 exchange property needs to be held for the appropriate use. Specifically, your property needs to be held for investment, or use in your trade / business. Property held primarily for personal use does not qualify for 1031 treatment.
Boot is any non-like-kind property that the taxpayer receives during an exchange. Receiving boot will trigger taxavle gain. The best way to avoid boot is to hire a qualified intermediary for your exchange so they can insulate you from receiving any taxable boot.
1031 Exchange Professionals
Get started with your 1031 real estate exchange by contacting a qualified intermediary. At Commercial Partners Exchange Company, our intermediaries have two decades of experience and can help you through every step of your exchange – from start to finish. No matter what type of property you’re selling, a like-kind exchange is a great tool for deferring your capital gains taxes and keeping your money working for you in a continued investment. Reach out to us today at our downtown Minneapolis office to chat with our team of intermediaries about your exchange.
- 1031 Hotline: 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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