This bank owned 1031 eligible commercial property located at 211 Dixie Highway is a 51,524 SF, free-standing, single-story, medical office / retail building on 5.75 acres located in Chicago Heights, IL. The building was originally constructed in 1986 and renovated in 2006. The building is 15% leased to one of the largest hospital groups in the Midwest. The medical group is under a triple net lease that is currently in the 1st year of a 5 year term. Base rent is $15.46/SF and the tenant is responsible for its portion of the real estate taxes, insurance and operating expenses. The remaining space is unencumbered by leases and is in near vanilla box condition.
1031 exchange property
REO Freezer/Cold-Storage Facility in Cranston, RI – 1031 Eligible
This banked owned 1031 eligible commercial property is a 234,000 SF cold-storage facility situated on 76.17 acres just 2 miles off of I-295 in Cranston, RI. The facility was built in 1987 and 1989 and is in good condition. There is also a large storage facility and repair garage in the back of the property that can be used to store vehicles or other property maintenance materials.
1031 REO Eligible Two Lots in Chicago, Illinois
Two banked owned 1031 eligible single family lots located at 1720-1722 George Street in Chicago, Illinois. The lots are east of the Kennedy Expressway and west of North Lake Shore Drive in Lakeview, north of Bucktown and DePaul.
Advance Auto Parts in Hampstead, North Carolina 1031 Eligible
A 6,800 square foot Advance Auto Parts in Hampstead, North Carolina is a 1031 eligible investment replacement property featuring new construction to be completed in September, 2012 and a 15 year net lease. Price is $1,709,386 with a capitalization rate of 7.0%.
Like-Kind: 1031 Exchange Definition and Application
For those not familiar with 1031 exchanges, the definition and application of like-kind requires an explanation to fully appreciate the breadth and depth. 1031 like-kind exchanges were first legislated as part of the National Revenue Act of 1921. 1031 exchanges were created under the premise that when a taxpayer reinvests the sale proceeds into another like-kind property, the economic gain has not been realized (creating the funds to pay the capital gains tax). The taxpayer’s economic position is the same, only the property has changed, as in land for an investment rental property. Consequently, to pay the tax when the replacement property of equal or greater value is acquired is unfair. Rather, when the replacement property is sold, the deferred gain from the original property plus any additional gain realized since the purchase of the replacement property is subject to tax. If another 1031 exchange is initiated, the tax is deferred.
Like-Kind Property Definition
The 1031 exchange code states that no gain or loss shall be recognized on the exchange of property held for productive use in trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held for productive use in trade or business or for investment. Property held in the United States is considered like-kind with property held in the United States, while property held internationally is like-kind with property held internationally.
State laws also determine whether a property is considered real or personal as is the case of water rights and options. Does the state consider mobile homes in a mobile home park personal or real property?
Like-Kind Application
In a 1031 exchange, the real property application is broad, allowing real property to be exchanged for any real property. Real property exchanges consider factors including “the respective interests in the physical properties, the nature of the title conveyed, the rights of the parties, and the duration of the interests” per Koch v. Commissioner of Internal Revenue, 1978. Examples of real property exchanges include:
- Land for an apartment building
- 30 year leasehold interest for timberland
- Single family rental for percentage interest in a Delaware Statutory Trust
- Improved real estate for unimproved real estate
What is not eligible for 1031 consideration is:
- Primary residence
- Partnership interests
- Stocks, bonds or securities
- Debt
- Inventory
Understanding what property is eligible for a 1031 exchange is one of the first steps to understanding the value of 1031 exchanges. For a complimentary eBook on “Ten Reasons Why a 1031 Makes Sense,” click here to receive your copy instantaneously.