What qualifies as like-kind exchange?

A like-kind exchange is a tax-deferred transaction that allows for the disposal of an asset and the acquisition of another similar asset without generating a capital gains tax liability from the sale of the first asset.

What is a Section 1031 like-kind exchange?

What Is Section 1031? Broadly stated, a 1031 exchange (also called a like-kind exchange or a Starker) is a swap of one investment property for another. Although most swaps are taxable as sales, if yours meets the requirements of 1031, you’ll either have no tax or limited tax due at the time of the exchange.

What does a 1031 exchange mean for a buyer?

A 1031 exchange allows you to sell one investment or business property and buy another without incurring capital gains taxes – as long as the exchange is completed according to IRS rules and the new property is of the same nature or character (like kind).

How long do you have to rent out a 1031 exchange property?

The replacement property must be owned for at least 24 months immediately after the exchange (the qualifying period) and in each of the two 12-month periods in the qualifying period: (1) the taxpayer must rent the replacement property to another person at a fair rental for 14 days or more; and (2) the taxpayer’s …

Is it too late for a 1031 exchange after closing?

WHEN IS IT TOO LATE TO DO A 1031 EXCHANGE? A 1031 exchange has to be set up before the closing of the relinquished property. Once the closing has occurred, your customer has missed the opportunity to do a 1031 exchange. The best time to recommend a 1031 exchange is when you take the listing.

What are the four different types of 1031 exchange structures?

What are the Four Different Types of 1031 Exchange Structures?

• Delayed Exchange. The most common usage of 1031 is the delayed exchange.
• Reverse Exchange.
• Simultaneous Exchange.
• Improvement Exchange.

What is a 1033 exchange?

1033 Exchange. A method of deferring capital gains taxes on property that is lost involuntary to condemnation, theft, or casualty, and a gain is realized from the insurance or condemnation proceeds.

Can you do a 1031 exchange on vacant land?

Vacant land doesn’t qualify for a 1031 exchange. A 1031 exchange involves real property for real property and vacant land certainly qualifies under this description. If, for some reason, you believe your situation represents an unusual exception, you’re encouraged to consult with your tax advisor for clarification.

Can you do a partial 1031 exchange?

With a 1031 exchange, ideally you want to shoot for a full and complete 1031 exchange by avoiding constructive receipt of any boot or like-kind property. However, sometimes receiving boot is unavoidable. In these instances, a partial 1031 exchange is a better alternative to no 1031 exchange at all.