Many taxpayers have questions about what types of property can be used in a 1031 exchange. In this article, we are going to discuss whether you can 1031 exchange a parcel of unimproved land for an existing building.
Like-Kind “Real Property” is Broadly Defined
Most real estate in the United States is considered like-kind to any other real estate in the United States; and differences in the grade or quality do not change the character of the classification as real estate. There can be some complications with shorter term leasehold estates and easements, oil and gas royalties, water or mineral rights that are based upon volume or quantity so please be sure to check with your own CPA or tax attorney before taking any action.
For example, unimproved real property is considered like-kind to improved real property, because the lack of improvements is a distinction of grade or quality and NOT the character of the property – both are “real” property.
Remember that both the relinquished and replacement properties must be held for a qualified purpose of investment or business purposes.
Additional Authorities:
1031 Qualified Intermediaries
The qualified intermediaries at CPEC1031, LLC have decades of experience working with taxpayers on all types of like-kind exchanges across the United States. We can answer your 1031 exchange questions, prepare the required documentation for closing, and offer recommendations to make sure your exchange is successful. Contact us today at our downtown Minneapolis offices to learn more about the like-kind exchange process, how it can benefit you, and how we can help turn your 1031 exchange dream into a reality!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2024 Copyright Jeffrey R. Peterson All Rights Reserved