Qualified use is one of the core concepts that define the rules of a 1031 exchange, but many people are confused by the details. In this article, we are going to outline the general concept of qualified use as it’s applied in a 1031 exchange of real estate.
What is Qualified Use?
In a like-kind exchange, all real property involved in the transaction must be held for investment or trade or business purposes. Furthermore, your relinquished property must be exchanged solely for other like-kind business or investment real property. This is a foundational rule of 1031 exchanges. The first question you should ask yourself when considering a like-kind exchange is: “does my property meet the qualified use benchmark?”
The IRS may look at all objective evidence surrounding the sale and acquisition to determine whether a person's use of the properties as part of the 1031 exchange is consistent with an “investment or trade or business intent.”
Real property located in the United States and real property located outside of the United States are not considered like-kind property.
1031 Exchange Company in Minneapolis, MN
If you’re looking for a resource to guide you through the 1031 exchange process, you’ve come to the right place! CPEC1031, LLC is a top-notch 1031 exchange company with more than two decades of experience facilitating like-kind exchanges of all shapes and sizes. You don’t have to be a massive real estate investor to save money in a 1031 transaction. 1031 exchanges can be utilized by any United States taxpayer. Contact our intermediaries to learn more about the specifics of the like-kind exchange process and see how we can help.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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