One of the fundamental rules of a 1031 Exchange is that the properties exchanged must be of “like-kind”. Given the importance of this rule, understanding what qualifies as “like-kind” is imperative to using a 1031 Exchange to your advantage. If the transaction qualifies for Section 1031 Exchange treatment though, the capital gains tax obligation can be deferred, potentially saving a substantial amount of money that can then be re-invested.
Andy Gustafson
Aircraft 1031 Exchange Testimonial
This 1031 exchange was a referral from AIC Title Services in Oklahoma City, Oklahoma. The client was exchanging a Cessna 340A and replacing with Cessna 310Q with air. This was a forward exchange where the funds from the disposition were wired to a qualified escrow account and held until needed for the acquisition of the replacement aircraft.
Silver Bags of Pre-1965 Coins: 1031 Eligible
“Junk” bags of U.S. circulated silver coins such as dimes, quarters and half dollars minted before 1965 are eligible as replacement property in a 1031 exchange. These coins are typically traded in $1,000 face value and contain 715 to 770 ounces of silver, representing an inexpensive way to purchase silver per ounce. Fractional bags of 125, 250 and 500 silver dollars, in addition to silver collectibles such as the certified MS63 to MS65 U.S. silver dollars and MS 60 Morgan and Peace silver dollars are acquired to hold for silver content and coin scarcity.
Barton Ridge 1031 Exchange Eligible Investment Property
Barton Ridge, a 1031 exchange eligible investment property represents 5,000 acres of the most wonderful hunting, fishing and overall outdoor experience in the Southeast. A diverse wildlife habitat, Barton Ridge has developed into one of the premier trophy animal areas in the entire Southeast. Whether you enjoy a hunt with flushing dogs in the more traditional manner or utilizing the European driven style, the crackling of the birds followed by the bursting of wings is a wonderful moment. Barton Ridge’s many streams offer a unique opportunity for fly fisherman along with a catfish pond and trophy bass on a trophy managed pond sets.
1031 Exchange Guidelines
As a general rule, anytime you sell property, the gain you receive as a result of the sale is subject to capital gains taxes. For example, if you purchased a property five years ago for $100,000 and now wish to sell it for $150,000, you would be subject to paying capital gains taxes on the gain of $50,000. One strategy that allows you to defer capital gains is to enter into a 1031 Exchange. Section 1031 of the Internal Revenue Code can provide an effective mechanism for deferring the payment of payment of capital gains taxes if the 1031 exchange guidelines are followed.
Mineral Interests and 1031 Exchange
In most transactions for the sale of real property, capital gains taxes are levied on any realized gain as a result of the sale. One way to defer the payment of capital gains taxes is to enter into a Section 1031 Exchange instead of completing a conventional sale of the property. In order to qualify for 1031 Exchange consideration, the property exchanged must meet very strict guidelines, including the requirement that the property exchanged be “like-kind”. While the exchange of some types of real property clearly meet the Internal Revenue Service guidelines, determining whether other types of property interests qualify can be more complicated. For example, certain oil, gas and mineral interests are potentially eligible for Section 1031 Exchange treatment, while others are not eligible.