Can I do a 1031 Exchange of Bitcoin & Cryptocurrency?

Bitcoin Exchanges

Bitcoin and cryptocurrency is still in its infancy. As a result, many investors and regulators are still wrapping their heads around the concept and how to deal with it. Many investors have been using section 1031 of the IRC to defer their taxes on the sale of cryptocurrency – leading many to question the validity of such transactions. This article is focused on 1031 exchanges of bitcoin and other cryptocurrencies.

Bitcoin Exchanges

So are 1031 exchanges of bitcoin allowed? In short, no. The new tax bill that was recently signed into law and became effective on January 1, 2018 restricts like kind exchanges to real property. All items of personal property (including bitcoin and other cryptocurrencies) are excluded from 1031 exchange tax deferral.

That being said, 1031 exchanges are still valid for real estate. If you want to defer the capital gains taxes on the sale of real estate, don’t hesitate to speak with a qualified intermediary about your situation.

1031 Exchange Company in MN

Like-kind exchanges under section 1031 of the IRC can save taxpayers vast sums of money that would otherwise be taxed. The purpose of section 1031 is to stimulate the economy by allowing investors to defer their capital gains taxes on the sale of real estate, so long as they move those net proceeds into other like-kind investment property. 1031 exchanges are available to all American taxpayers. Give our qualified intermediaries a call today to discuss your 1031 exchange of real estate.

  • 1031 Hotline: If you have questions about 1031 exchanges and bitcoin, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

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