If you know anything about 1031 exchanges, you’ve probably heard the term “like-kind.” In this article, we are going to share a few tips for making sure your 1031 exchange replacement and relinquished property is like-kind.
The Importance of Like-Kind
The like-kind rule is one of the most important regulations that govern the 1031 exchange of property. There’s a reason 1031 exchanges are often called like-kind exchanges. Basically, section 1031 states that your relinquished property and your replacement property both need to be like-kind in order to qualify for a 1031 exchange.
Consult with a Qualified Intermediary
If you are at all confused about what does and does not constitute like-kind property, contact a qualified intermediary who specializes in like-kind exchanges. Among other things, a qualified intermediary can answer all of your questions regarding like-kind property, and even advise you on what types of property to identify in your exchange.
Be Extra Careful with Personal Property
Like-kind has a pretty broad definition in real estate exchanges. However, the same is not true for exchanges of personal property, which have a much narrower definition of like-kind. In a real estate exchange, you can exchange pretty much any real estate for any other real estate (so long as it satisfies the other 1031 exchange rules). With personal property, your relinquished and replacement property needs to be very similar. For example, you can exchange an airplane for another airplane, but not for a fleet of trucks.
Minneapolis 1031 Exchange
Jeff Peterson has been facilitating 1031 exchanges of real and personal property for decades. Whether you’re selling a piece of commercial property, or a valuable piece of art, a 1031 exchange may help you defer capital gains taxes on the sale of your property. Contact Commercial Partners Exchange Company today to learn more about the 1031 exchange process and how you can benefit!
- 1031 Hotline: If you have questions about like-kind property in a 1031 exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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