Real Estate

Nearly any type of property can qualify for 1031 Exchange, provided it is held for business or investment. Although other types of property qualify (see list to the left), the most common type of property exchanged is real estate.  Any real estate property held for business or investment may be exchanged for other business or investment property. For example, you can exchange raw land for an apartment building, a rental house, or a warehouse, and vice versa. However, you cannot trade raw land for a personal residence (it is not considered business or investment real estate) or equipment (it is not considered real estate). The matching of real estate being sold with replacement real estate is generally very flexible under the 1031 rules, as long as the property is used for business or investment purposes.

There are many situations where properties may qualify for a 1031 Exchange.  Frequently the opportunity to exchange property goes undetected by the potential exchanger until it is too late. The following list of questions is designed to help you recognize exchange opportunities that you might not be aware of. If you answer yes to any of these questions, you may be a candidate for a 1031 exchange. Make an appointment with us today to discuss your individual situation.

• Are you selling real estate used for business or investment purposes?
• Do you plan on buying new business or investment real estate after the sale of the existing property?
• Do you have a significant taxable gain (over $20,000) from the sale?
• Was a significant amount of depreciation taken on the real estate that you are selling? Are you aware that depreciation increases the gain on the sale of that property?
• Are you selling business real estate in order to reduce the management headaches related to the current property?
• Do you desire to sell one piece of real estate in order to diversify your investment into numerous pieces of real estate?
• Do you want to construct a new building before you sell your old building? Do you realize the gain may be 100% deferred through a properly structured reverse exchange if set up before you begin construction?
• Are you selling a property that has been used as a vacation home? (See our special vacation homes section.)