There are many factors to consider when considering a 1031 exchange, but the first and most important is determining whether or not your property even qualifies. In this article, we are going to talk about how you can tell if your property does not qualify for 1031 exchange treatment.
Some Property is Disqualified Outright
Some property is disqualified outright from Section 1031 of the Internal Revenue Code. Specifically, personal property cannot be used in a 1031 exchange transaction. That means you cannot exchange any property that is used for personal reasons. This includes your primary residence, and other items of non-real property used for personal use like artwork, agricultural property, and aircraft.
Qualified Investment Real Estate
All property included in a 1031 exchange must be real estate that you hold for a qualified purpose. Specifically, that qualifying purpose is investment or business use. Some common examples of property used in a 1031 exchange include: apartment buildings, duplexes, hotels, retail space, and more. You are allowed to exchange into and out of different business segments, as well as different states and locales. So long as you ensure that both your relinquished and your replacement properties fit the definition of qualified investment real estate.
Start the Like-Kind Exchange Process Today
Get started with the like-kind exchange process today by contacting CPEC1031, LLC. Our team of qualified intermediaries can walk you through all the intricacies of the 1031 exchange process, making sure you are well informed along the way. There are many potential pitfalls during the exchange process, and our intermediaries will make sure that you have all the information needed to avoid them. Reach out to our team today to learn about the exchange process and see how we can help you defer taxes with a 1031 exchange of reach estate.
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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