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1031 Exchange
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Enter New Glossary Term:
Like Kind Property
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| Enter Glossary Term Description:
Property disposed of and the property acquired for a Section 1031 exchange must be "like kind" to each other, and must be held for productive use in a trade or business or for investment. There are two types of property: real and personal. Real property is like kind to all other types of real property. Personal property is like kind only to personal property if it is of similar use or quality.
Examples of Like Kind Property Exchanges:
- Real property may be exchanged with trade or business, or investment properties. For example, an apartment building can be exchanged for a hospital, several single-family rent houses, or a shopping center.
- Personal property may only be exchanged for the same type of property; for example, an airplane must be exchanged for an airplane, a boat for a boat, cattle for cattle (livestock received must be the same sex as livestock disposed of!), a dump truck for a dump truck, etc.
It is important to note that property used for personal use such as the taxpayer's primary residence or a pleasure boat or any property not used for a business or investment purpose, would not qualify for Section 1031 treatment. Consult your tax advisor to determine if your properties qualify for 1031 treatment. |
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