Like-Kind Exchanges (1031 Exchanges)

Learn about Like-Kind Exchanges (1031 Exchanges), a powerful tool for deferring capital gains tax on the exchange of business or investment properties. This guide explains the criteria for qualifying exchanges, the treatment of boot, and the implications of deferred exchanges. Essential for real estate investors and businesses looking to optimize their tax strategies through property exchanges.

Highlights:

• Qualifying Property: Exchange real property held for productive use in business or investment for other real property of like-kind.

• Boot and Gain Recognition: Gain is recognized to the extent of any money or unlike property (boot) received.

• Deferred Exchanges: Must meet specific timelines, including a 45-day identification period and a 180-day receipt period.

• Related Parties: Special rules and potential gain recognition if property is disposed of within two years.

• Excluded Property: Personal property, inventory, and properties used for personal purposes are not eligible.