When it comes to 1031 exchanges, there is a persistent question of “does my property qualify” for 1031 treatment? In this article, we are going to discuss the complexities of 1031 exchanges of conservation easements. Do conservation easements qualify for 1031 exchange treatment?
What is a Conservation Easement?
First of all, let’s briefly define what we mean when we say conservation easement. Simply put, an easement grants a person the right to enter, cross, or use another person’s property. A conservation easement is an easement used primarily for conservation purposes. For example, a farmer who owns a large tract of land may grant the government or a conservation organization an easement to utilize a portion of their land for conservation purposes. The farmer would be paid for use of the land, and the organization would be able to use it for conservation purposes.
1031 Exchange Considerations
But what if the farmer wants to 1031 exchange this land with the conservation easement? IRS private letter rulings have generally supported the use of conservation easements for 1031 exchange purposes. However, 1031 exchanges of conservation easements can also depend heavily on state laws defining the purpose of the easement. Consult with your 1031 exchange intermediary about your specific situation.
Contact a Qualified Intermediary
Before you embark on a 1031 exchange of real estate it’s important to consult with a qualified intermediary who can explain your options and walk you through the process. The qualified intermediaries at Commercial Partners Exchange Company have twenty years of experience working on like-kind exchanges of real property. We can prepare all of your required documentation, help you find replacement properties, and more. Contact us today to set up a time to chat with one of our qualified intermediaries at our downtown Minneapolis office.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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