Can I Do a 1031 Exchange from an Apartment Building to Retail?

 Apartment Complex

Many taxpayers conducting 1031 exchanges want to know if they can exchange property between different industries or market segments. In this article, we are going to talk about whether or not it’s possible to 1031 exchange from and apartment building into a retail space.

Exchanging from Industry to Industry

The beauty of 1031 exchanges of real estate is that the like-kind rule is very broad. Most real estate is considered like-kind to most other real estate. That means it’s relatively easy to exchange out of one industry and into another (so long as you meet all of the other requirements of an exchange).

Let’s say you own a small apartment building (a four-plex) and you want to sell that property and exchange into a retail property. Can you do that under section 1031? Absolutely.

But remember, your property still needs to meet the qualifying purpose rule (it needs to be held for trade or business purposes), you need to complete the exchange within 180 days, and you need to go up in value, equity, and debt on the new property.

CPEC 1031

At Commercial Partners Exchange Company, our business is 1031 exchanges. We have over two decades of experience facilitating exchanges for clients in Minnesota and across the United States. Our qualified intermediaries can walk you through each and every step of your exchange. Contact us today to learn more about the 1031 exchange services we offer and get your exchange up and running. Our primary office is located in downtown Minneapolis, but we work with clients all over the country.

  •  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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