Discussion:Like kind exchanges

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Discussion Forum Index --> Advanced Tax Questions --> Like kind exchanges


Discussion Forum Index --> Tax Questions --> Like kind exchanges

Gborey (talk|edits) said:

4 May 2010
Client is selling a single family home in a major city which has been held for investment and rented out to third parties, usually on a long term basis (one year or more). Wants to do a Sec 1031 exchange. Does the replacement property have to be residential rental or could he invest in an office building, medical office building or other investment property which produces rental income but is not necessarily "residential"?

Doug M (talk|edits) said:

4 May 2010
Any of the above examples you gave work for IRC 1031. Real property exchanges are much more liberal than personal property exchanges. I saw a tavern for a dairy once.

Belle (talk|edits) said:

May 4, 2010
Doug - at least, in your example, they are both "beverage related" :-)

KathiJud (talk|edits) said:

4 May 2010
Real property can exchange for any other real property. Rental can swap for held for investment or vice versa.

Tax Writer (talk|edits) said:

4 May 2010
Agree with Kathijud; the IRS guidelines on real property exchanges are pretty liberal as long as you don't exchange for real property outside the US.

Harry Boscoe (talk|edits) said:

4 May 2010
"...could he invest in an office building, medical office building or other investment property...?"

Yes, but he's got to be sure what he acquires is an interest in real estate, i.e., it's not a partnership interest, not a REIT interest, not an LLC interest, but *real estate*.

And it doesn't have be *rental*; it has to be property held for use in a trade or business or for investment.

This discussion/thread is mighty casual, considering its topic. Section 1031 isn't "back-of-the-envelope" stuff. Gborey, do some reading about the requirements for a like-kind exchange under Section 1031. There's tons of it out there. And fill out your user profile.

Gborey (talk|edits) said:

5 May 2010
Thanks everyone. I have read a lot of info on 1031 but found very little on eligible replacement property.

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