Qualifying purpose is one of the foundational guidelines of the 1031 exchange, but many people have questions about what qualifies a property for 1031 exchange. In this article, we are going to talk about how to determine whether or not your property is held for a qualifying purpose.
What is Qualifying Purpose?
Qualifying purpose is one of the fundamental rules governing 1031 exchange of real estate. All property involved in a given 1031 exchange needs to be held by the taxpayer for a qualifying purpose. So what exactly does “qualifying purpose” mean? In order to qualify for 1031 exchange treatment, your property must be held for investment purposes, or for productive use in your trade or business. Property held primarily for personal use is excluded from 1031 exchange treatments. For example, if you own an apartment building that you rent out to tenants, that would fall under the qualifying purpose guidelines, while your primary residence would not.
Defer Your Capital Gains Taxes
A 1031 exchange is one of the best ways to avoid capital gains taxes when selling real estate. At CPEC1031, we have over two decades of experience in the field of 1031 exchanges. We work with clients in many industries and many states – through each and every step of the 1031 process. We can prepare your documents, answer all of your questions, and advise you along the way. Give us a call today to set up a time to chat about your 1031 exchange of real estate with one of our qualified intermediaries.
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.
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