Tax codes in general get a bad wrap for being overly complicated, difficult to understand, and out of reach for the average person. But in truth, 1031 Like Kind Exchanges are not only within reach, but fun!
1031 Like Kind Exchanges offer individuals the chance to be creative in how they structure their transactions. The qualified intermediaries at the Exchange Authority have been helping individuals take advantage of the 1031 Like Kind Exchange tax code since 1983. We welcome your calls and all your questions!
Here are the questions we get most often on 1031 Like Kind Exchanges:
“What are the requirements for a 1031 Like Kind Exchange?”
Like-kind refers to the use of properties. As a result, the old property and the new property must be held for investment or utilized in a trade or business. Vacant land, for example, may qualify whether it is leased or not. Commercial property may be used to purchase a rental home. Or, a lot may be sold to buy a condo. The opportunities are endless, which is what makes 1031 Like Kind Exchanges so much fun.
“I am a real estate investor that flips properties, how can 1031 Like Kind Exchanges work for my needs?”
The 1031 Like Kind Exchange can not be used for individuals who flip properties because the tax code specifically restricts properties held for resale. Investors or developers who strictly “flip” properties do not qualify for exchange treatment because the intent is resale.
This contrasts to a 1031 Like Kind Exchange where the individual holds onto their property as an ongoing investment.
“Give me an example of a1031 Like Kind Exchanges.”
Like Kind Exchanges do not feature property exchanges exclusively, which pleasantly surprises many people. The fun of 1031 Like Kind 1031 Exchanges derives from the variety of these deals.
We work closely with clients to follow all the Like-Kind rules so we can together uncover the endless opportunities for clients to take advantage of this tax deferred savings opportunity. For example, we have clients that have exchanged artwork for artwork or classic cars for classic cars!
“Give me an example of a tricky 1031 Like Kind Transaction”
Take for example our client who wanted to exchange their stallion horse for a filly horse. In that cased we had to advise them that that transaction would not qualify for a 1031 Like Kind Exchange. Why? Because in order for it to qualify for a 1031 Like Kind Exchange and meet the rules, the client would need to exchange stallion for a stallion, or a filly for a filly.
Experience Makes All the Difference For a Successful 1031 Like Kind Exchange
The bottom line is 1031 Like Kind Exchanges are fun, but tricky. The qualified intermediaries at Exchange Authority are here to navigate = all the rules and regulations of your transaction. With our help, you’ll be in experienced hands to take full advantage of this tax deferred opportunity.