A 1031 exchange is the sale of a property in exchange for a like kind property purchase. The exchange would qualify the gain of relinquished property as tax differed.
Like Kind Properties:
- two family residence - rental portion only
- office building
- industrial warehouses
- retail stores
- multi family apartment building
- farms
- vacant undeveloped land
- factories
- shopping centers
- leasehold interest of 30 years - including options to renew
For a property to qualify for a 1031 exchange and defer the tax liability, the relinquished property and replacement property must be qualifying property and like kind property, of same nature and character.
Time allowed for exchange:45 days after closing relinquished property to identify replacement property. 180 days after the closing of relinquished property to close on replacement property.
Replacement property would be equal or greater in value.
A qualified intermediary must be employed to structure the exchange.
This blog is a basic outline of a 1031 exchange and not legal advise. You should contact your attorney or accountant for any of your own transactions.
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