Mixing 1250 & 1245 Property in a 1031 Exchange

1250 Property in a 1031 Exchange

In a real estate transaction you may have 1250 property (the traditional real estate and buildings), and then you may have other components that are personal property that are characterized as 1245 property for depreciation.

1250 & 1245 Property

What's the impact of having a mixed bag of 1250 and 1245 components in a like-kind exchange? The answer is that in order to maximize the benefit of your 1031 exchange you're going to want to receive replacement property that has both 1245 and 1250 components so that we can match up the proceeds from the sale of your 1245 with new 1245 property, and the proceeds from the old 1250 property to new 1250 property.

Getting the Maximum Benefit

In order to get the maximum benefit you really need to know what your depreciation has been on the prior relinquished property and then target replacement properties that meet your needs to maximize the tax deferral.

  • 1031 Hotline: If you have questions about 1250 vs. 1245 property in a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

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