Often the question is asked whether in a 1031 like-kind exchange must land be exchanged for land. The answer is found in the like-kind requirement under Internal Revenue Code (IRC) Section 1031. To qualify for consideration in a 1031 exchange, the relinquished or old property and the replacement property must be like-kind. Property is either real or personal property held for productive use in a trade, business or for investment.
Andy Gustafson
Section 1031 Exchange: Converting Rental to a Primary Residence
Under the normal Internal Revenue Service, or IRS, code regulations you are required to pay capital gains taxes when you sell a property and realize a profit. Although the rate at which capital gains are taxed fluctuates, it is typically rather high given federal, possibly state capital gains and recaptured depreciation taxes. This tax can quickly eat away at the gain you realized on the sale of an investment. One option that allows you to defer the payment of capital gains taxes is to enter into a Section 1031 exchange instead of a traditional sale. In some limited circumstances, converting a rental to a primary residence after the exchange has been completed may be allowed eliminating the majority of the gain via the $500,000/$250,000 exclusion.
FIRPTA, 1031 Exchange: What a Title Officer Should Know
What should a Title Officer know about the Foreign Investment Real Property Tax Act (FIRPTA) and a 1031 exchange? What IRS forms need to be filed and when? How does a 1031 exchange impact the transaction and FIRPTA reporting requirements are all questions a Title Officer or Attorney will face prior to the closing on real property interests owned by a foreign person.
Branson, Missouri 4 Unit Multi-Family – 1031 Eligible
Fantastic location for this 1031 eligible four unit replacement property built in 2007. Each unit features 3 bedrooms, 2 bathrooms with washer and dryer located in beautiful Branson, Missouri. All units are rented providing cash flow to owner.
Conservation Easements and A Section 1031 Exchange
Taxpayers who are looking to reduce taxes on the sale of property often consider the possibility of entering into a Section 1031 Exchange in lieu of a straight sale. If the transaction qualifies, any capital gains taxes that would otherwise be due can be deferred until the sale of the replacement property. Among other requirements, a 1031 Exchange requires the seller to exchange the property for a property of “like-kind” in order to be eligible for 1031 Exchange treatment. The “like-kind” component of a 1031 Exchange can create confusion when specific rights to property, such as an easement, are exchanged instead of the all rights to the property.
1031 Exchange Rules Insight
Internal Revenue Code Section 1031 has many 1031 exchange rules that start with the code itself: “No gain or loss is recognized when property held for productive use in a trade, business or investment is exchanged for property held for productive use in a trade, business or investment.” A 1031 rule is to hold the property for the proper intent – or not for predominant personal use. Without proper intent, the 1031 exchange is not eligible for consideration.