When you’re doing a 1031 exchange you need to exchange for like-kind property. You can’t sell an apartment building and buy a BMW as your replacement property because a BMW is not like-kind to real estate. But you can exchange an apartment building for any other kind of real estate in the US that you're going to hold for investment or business purposes. It doesn’t really matter if you're exchanging raw land for improved property. As long as it’s in the United States it’s considered like-kind.
Like-Kind with Non-Real Estate
The caveat to that is that you can also do personal property exchanges with non-real estate. So if you have a dump truck or a crane that you use in your business, those items can also be exchanged in a personal property exchange, but the like-kind requirement is way more stringent than it is in the realm of real estate. So a helicopter can be exchanged for a helicopter, and a male bull can be exchanged for another male bull but not a female cow. That’s how precise the standards are for like kind in the realm of personal property.
- 1031 Hotline: If you have questions about like-kind requirements in 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved