Replacement Property acquired in an exchange must be "like-kind" to the property being sold
(Relinquished Property). Like-kind means "similar in nature or character, notwithstanding
differences in grade or quality." In order for the properties to qualify as "like-kind" they
must be held for productive use in a trade or business or held for investment purposes and be
located within the United States. Foreign property does not qualify. For example: Raw land
held for investment may be exchanged for Single Family Rentals or any combination of the below
examples:
Single Family Rentals
Farms/Ranches
Offices
Motels/Hotels
Golf Courses
Multi Family Rentals
Raw Land
Retail
Industrial
Leases of 30 years or more
PROPERTY
NOT ELIGIBLE UNDER 1031:
Primary
Residence
Interest
in Partnerships
Foreign
Property
Money
Stocks,
Bonds, or Notes
Stock in
trade, inventory or other property held inherently for sale
Section
1031 of the Internal Revenue Code Sec. 1031 [1986 Code]
1031 - Exchange of
property held for productive use or investment
(a) Non recognition of Gain or Loss From Exchanges Solely in Kind.-
(1) IN GENERAL.- No gain or loss shall be recognized on the exchange
of property held for productive use in a trade or business or for
investment if such property is exchanged solely for property of like
kind which is to be held either for productive use in a trade or
business or for investment.
(2) EXCEPTION.--This subsection shall not apply to any exchange of
--
(A) stock in trade or other property held primarily for sale,
(B) stocks, bonds, or notes,
(C) other securities or evidences of indebtedness or interest,
(D) interest in a partnership
(E) certificates of trust or beneficial interests, or
(F) choses in action.
(e) EXCHANGES OF LIVESTOCK OF DIFFERENT SEXES. -- for purposes of
this section, livestock of different sexes are not property of a
like kind.
If you need anymore information or have any specific questions about 1031 tax-deferred
exchanges, please contact us at 1031exchange@marthadon.com
or call us at (386)-478-9202 .
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