Section 1031 of the IRS Code states that property which qualifies for tax-deferral treatment is any form of property used in a trade or business or held for investment. Any form of investment real estate or any real estate housing or business qualifies.
An example of property that would not qualify would be your primary residence or another property that you treat as a second home for tax purposes.
The Basic Exchange Rules
The Tax Reform Act of 1986 eliminated any special capital gains tax treatment and thus made exchanging more financially advantageous. This act made capital gains taxable at ordinary income rates. This effectively moved the tax rate on capital gains from 20% to 28%, thus making tax-deferred exchanging more attractive because of the potential tax savings. (As of the last website update, the capital gains tax rate has been reduced to 15%.)
1. Property must qualify for a tax-deferred exchange.
2. You must state that you are planning to do a tax-deferred exchange prior to the sale of your current property.
1031 Exchange Services, LLC
The meaning of "like-kind" under Section 1031 of the IRS Code is "any form of real estate used in a trade or business or held for investment." The key word is real property, which should not be confused with other types of investments such as stocks, bonds, personal property or mortgages.
3. You must acquire "like-kind" property.
You may be wondering if there is a minimum holding period or how held for investment is defined.
While code does not specifically state the answer, it says that your intent must be to hold the property for investment and not use it as dealer inventory or what some refer to as "flip property." Many tax advisors suggest that the minimum holding period should be one year.
4. For property to qualify as either a relinquished or replacement property, it must be held for investment.
Phone Number: 1-888-552-1031
Fax Number: 1-828-251-5914
E-mail Address:
info@1031exchangeservices.net
Mailing Address:
1031 Exchange Services, LLC
56 Central Avenue, Suite 201
Asheville, NC 28801
We have a team that is ready to help you with whatever 1031 situation you are in.
To speak with our staff, please contact us in one of the ways below:
Home Office:
Satellite Office:
Phone Number: 1-888-552-1031
Fax Number: 1-828-251-5914
E-mail Address:
info@1031exs.net
Street Address:
1031 Exchange Services, LLC
101 N. Pine Street, Suite 400
Spartanburg, SC 29302
