1031 Real Estate
1031 exchange

Tenant Screening | Join RentLaw.com

 
Features

State Laws

Normal Wear Tear
EVICTIONS
Security Deposit
Breaking a Lease

Tenant Screening
Landlord Tenant Forms
Landlord Tenant Statutes
Mold Guide
Section 8
Housing Vouchers

RENTERS INSURANCE
HUD - Housing & Urban Development
Rent Collection
LATE RENT FEES
Credit Reports
Small Claims Courts
Sublet
Rent Control
Landlord Books
Lead Paint Guide
Military Lease Clause
Foreclosures
Bankruptcy
Credit Center

Free Legal Forms
Apartment Ratings
Moving Guides 
Apartment Search
Rent or Buy
Home Inspection
Tax Deductions
Lawyer Search
Home Loans - Bad Credit
Commercial Real Estate
Property Management

Commercial Introduction

Commercial Real Estate Terms

1031 Exchange

Limited Liability Co
Real Estate Trusts
Real Estate School
Contact Rentlaw.com
RentLaw on Linkedin
Like-Kind Exchanges - Real Estate Tax Tips
What is a 1031 exchange?

A 1031 exchange makes it possible for investors to sell and buy property of like kind while deferring tax consequences. This transaction is authorized by section 1031 of the IRS code and offers investors a reliable strategy for the protection of their real estate assets. A successful 1031 exchange allows the investor to reinvest 100% of the equity from the sale of a property into the purchase of a preferred replacement property without recognizing any gain. This type of property sale and reinvestment can either be done through a simultaneous or delayed 1031 exchange. In most cases a 1031 exchange is done as three-party delayed exchange also known as a "Starker Exchange" in which an intermediary ensures a reciprocal transfer of the properties and provides a "safe harbor" against the actual receipt of exchange funds. It is extremely important that this process be done correctly, otherwise, a taxable event may occur.

ADVANTAGES OF A 1031 EXCHANGE

1031 exchanges provide real estate owners with a range of opportunities to meet personal investment objectives including increased leverage, improved cash flow, diversification, reduction of management obligations, geographic relocation and/or consolidation. The tax dollars saved by an exchange may be maximized to increase an investor's overall net worth. Ultimately, the exchange process allows investors to reorganize and improve their real estate portfolios to best suit their unique interests and needs. Strategic Tax and Wealth Planning can further maximize the value of current and future assets. 

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.

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.

Additional Resources

IRS Publication 544, Sales and Other Dispositions of Assets 

IRS Form 8824, Like-Kind Exchanges 

TIC Tenant in Common Guide
 

Commercial Real Estate Glossary

1031 Exchanges

Renters Insurance
Apartment Condo Home
Details
 


 

RENTLAW.com

TENANT SCREEENING

GET YOUR TENANT CREDIT REPORTS
 

FREE SETUP
No Inspection

Criminal & Credit Report, Sex Offender and more

Tenant Screening RentLaw.com