The first thing you need to do when considering a 1031 exchange is to figure out whether or not your property qualifies for 1031 exchange treatment. In this article, we are going to talk about how to determine whether or not your property qualifies for 1031 exchange treatment.
Is it Like-Kind Real Property?
1031 exchanges only apply to like-kind real property. With the implementation of the Tax Cuts and Jobs Act, personal property exchanges are no longer allowed.
Are You Holding it for a Qualifying Purpose?
You also need to hold your property for a qualifying purpose. Specifically, you need to hold your property for investment or business purposes. You cannot exchange property held primarily for personal use. That means your primary residence is excluded from 1031 treatment.
Does Your Property Pass the Napkin Test?
You need to make sure that the property you are exchanging into is greater than your relinquished property in terms of equity, value, and debt (this is called the napkin test).
Save Money on Taxes with a Like-Kind Exchange
A like-kind exchange is your ticket to owing fewer capital gains taxes when you sell investment real estate. At Commercial Partners Exchange Company, we have more than two decades of experience facilitating 1031 exchanges of all shapes and sizes. We have the experience needed to ensure the success of your exchange. Contact us today to discuss your 1031 exchange options. We are located in the heart of downtown Minneapolis, and also serve the entire state of Minnesota as well as the entire 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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