"Like-Kind" Property

Investors often mistakenly believe they must acquire a property exactly like their relinquished property. They are surprised to learn a wide variety of properties can be considered "like-kind.

"Like-kind" does not refer to the type of property. Instead, it addresses the intended use of the property. Provided the property is initially acquired and held for either business or investment purposes, it can qualify as a suitable replacement property under IRC Section 1031.

For example, any of the following can be considered "like-kind" property exchanges: a duplex for a fourplex, bare land for improved property, a rental house for a retail center or an apartment building for an office building. Investors do not have to exchange for exactly the same type of property as relinquished.

The tax code also lists items that are not considered "like-kind" and are expressly excluded from non-recognition. These include: stock in trade or other property held primarily for sale; stocks, bonds, or notes; other securities or evidences of indebtness; interests in a partnership; certificates of trust or beneficial interest; choses in action. In addition, the Code was amended in 1989 rendering property outside the United States non "like-kind".

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You can also view or print our complete 1031 Tax Exchange document in Adobe PDF format.
	1031 Tax Exchange PDF file.

Disclosure
Jerry Babin - Realtor with RE/MAX Southern Realty cannot advise you concerning the specific tax consequences or advisability of a deferred exchange for tax planning purposes. You will be required to seek the counsel of your accountant or attorney. If we can answer any of your general questions, or those of your representatives, please do not hesitate to contact us.