3 Signs that Your Property Does Not Qualify for 1031 Exchange Treatment

Qualified 1031 Property

Before you even think about starting a 1031 exchange, you have to first determine whether or not your property even qualifies. The basic rule of thumb is that all 1031 exchange property must be held for investment or business purposes. Additionally, only real property may qualify for 1031 exchange – personal property need not apply. In this article, we are going to talk about a few signs that indicate that your property does not qualify for 1031 exchange treatment.

You Live in Your Property

If you are living in your property as a primary residence, it will likely not meet the qualified use requirement for 1031 treatment. The IRS limits 1031 exchanges to investment property only so your family home that you currently live in will not qualify.

Your Property is not Real Estate

As mentioned above, 1031 exchanges currently only apply to real estate. If you’re trying to exchange items of personal property, you will not be able to do so in a 1031 transaction. This is a fairly recent change brought on by the Tax Cuts and Jobs Act.

Your Property is Used as a Vacation Rental

Vacation rental properties may qualify for 1031 treatment, but they have to meet pretty strict barriers. Learn more about vacation property 1031 exchanges here.

Sell Your Investment Property in a 1031 Exchange

1031 exchanges offer great benefits to big and small investors alike. When structured correctly, a 1031 exchange offers you the ability to defer your capital gains taxes on the sale of real estate, so long as you reinvest your net proceeds into a bigger replacement property. There are a lot of requirements you have to meet in order to complete a successful exchange and working with a qualified intermediary is the best way to cover your bases. Contact us today to learn more about our 1031 exchange services and how we can help you achieve your investment goals.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

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