Like-Kind Exchanges - Some Tips
From the IRS:
Generally, if you exchange
business or investment property solely for business or investment
property of a like-kind, no gain or loss is recognized under Internal
Revenue Code Section 1031. If, as part of the exchange, you also
receive other (not like-kind) property or money, gain is recognized to
the extent of the other property and money received, but a loss is not
recognized.
Section 1031 does not apply
to exchanges of inventory, stocks, bonds, notes, other securities or
evidence of indebtedness, or certain other assets.
Note:
The above information references an Internal Revenue Code (IRC)
section. A link to the Internal Revenue Code is included for the
convenience of those who would like to read the technical reference
material. To access the applicable Internal Revenue Code sections visit
U.S. code search page. Enter 26 in the Title box and then the
appropriate IRC section in the Section box and click on the search
button.
Like-Kind Property
Properties are of
like-kind, if they are of the same nature or character, even if they
differ in grade or quality. Personal properties of a like class are
like-kind properties. However, livestock of different sexes are not
like-kind properties. Also, personal property used predominantly in the
United States and personal property used predominantly outside the
United States are not like-kind properties.
Real properties generally
are of like-kind, regardless of whether the properties are improved or
unimproved. However, real property in the United States and real
property outside the United States are not like-kind properties
Finding a Qualified Intermediary
The Federation of Exchange
Accommodators (FEA) has a member base of professional 1031 exchange
experts. You can access this locater to find a 1031 specialist in your
area in our directory Go to the left side bar and click through to member directory. Click on
your state and locate a professional in your area. The qualified
Intermediary is a must in this type of transaction. The FEA is the
professional trade organization for Qualified Intermediaries.
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