Introduction to Personal Property 1031 Exchanges Part I

Introduction to Personal Property 1031 Exchanges

There has been a significant increase in the number of personal property 1031 exchange transactions over the last decade, as corporations and individuals alike learn more about the income tax benefits of this powerful tax-deferral strategy.

The vast majority of tax-deferred like-kind exchanges involve real estate.  Personal property 1031 exchanges only account for an estimated 5% of the total transactional volume.  However, research indicates that the growth in personal property 1031 tax-deferred exchanges will be significant over the next decade.

Advantages of a Personal Property 1031 Exchange

A tax-deferred like-kind exchange of personal property allows a corporate or individual taxpayer to sell his existing personal property (relinquished property) and purchase more profitable and/or productive personal property  (like-kind replacement property) while deferring Federal, and in most cases state, capital gain income tax liabilities.