Property that Cannot Be Exchanged Under Section 1031

 Non 1031 Exchange Property

The Tax Cuts & Jobs Act that was passed late last year and went into effect in early 2018 made numerous changes to the rules governing section 1031 – particularly what can and cannot be exchanged in a 1031 transaction. In this article, we are going to talk about a few types of property that cannot be exchanged under Section 1031 of the Internal Revenue Code.

Non Like-Kind Property

All property involved in a 1031 exchange needs to be like-kind. That means any non like-kind property is not eligible. How do you determine like-kind? Thankfully, the definition is pretty broad when it comes to real estate. But make sure you are only exchanging property that is used for investment or business purposes.

Personal Property

The Tax Cuts & Jobs Act which went into effect earlier this year effectively restricted 1031 exchanges to real property. That means that many items of personal property that were once eligible for 1031 treatment, can no longer be exchanged in such transactions. Here are a few examples of personal property items that can no longer be exchanged:

  • Aircraft

  • Artwork

  • Business Equipment

  • Coins & Precious Metals

  • Livestock

Is a 1031 Exchange Right for You?

Looking for help with you 1031 exchange of real estate? Our qualified intermediaries are ready and able to walk you through every step of the process – from selling your relinquished property to closing on your new replacement property. At Commercial Partners Exchange Company, our intermediaries have over two decades of experience facilitating exchanges in Minnesota and across the country. Contact us today at our downtown Minneapolis office to set up an appointment with one of our intermediaries and see if a 1031 exchange is right for you!

  •  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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