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1031 Exchanges

Martha and Don Woods PA

the internet savvy REALTORS®

Watson Realty Corp.

1504 S Atlantic Ave

New Smyrna Beach, Florida 32169

Like-Kind Property Definition


Like-Kind Requirement:

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:

 
bulletPrimary Residence
 
bulletInterest in Partnerships
 
bulletForeign Property
 
bulletMoney
 
bulletStocks, Bonds, or Notes
 
bulletStock 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) Nonrecognition 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 or toll-free 1-877-281-7432.