The other day, as I mentioned in an earlier poston my BLOG,
a novice “Green” investor and I were talking about the pros and cons of the 1031 Like Kind Exchange. (
Good info on the 1031 is available at NAR:
She had heard "by the grapevine" and mistakenly believed
that she absolutely had to acquire property exactly like
her relinquished property.
I discovered this as we started to scope out her property options,
and we talked about what they could be. She confessed that she had been distressed about how she was going to find an exact match.
She really was quite thrilled , in fact she gave me a big "thumbs up!" when I commented that a wide variety of properties
can be considered Like-Kind.
Contrary to her concerns, investors DO have a latitude and even an intriguing perspective from which to make choices under the 1031 Exchange Plan. And that could turn out to be a "good-thing", especially if you are interested in ECO-friendly investing here in the Greater Asheville area. “Think of it this way,” I assured this client, “Like-Kind does NOT refer to the nature, character, or type of property. … it’s all about the intended use of the property.”
Here are some examples:
* A professional office in Manhattan for a mountain cabin with Views or perhaps land for sale that could be leased back to a farmer or a portion of which could be dedicated to a conservation easement in a town near Asheville.
* A condo in California for unimproved Land with a waterfall in the Asheville area
* A single family rental in Chicago for multi family rental in West Asheville
* Non income providing raw land in Florida for income producing rental property, possibly a horse farm for sale in the beautiful rolling lands near Tryon, NC.
* An apartment building in downtown Detroit for an office building in Up-and-coming Marshall, North Carolina
WHICH would you choose? Check out my poll to your fight.
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. Also, real properties generally are of a Like-Kind,
regardless of whether the properties are improved or unimproved.
TOTALLY TRUE: Investors do not have to exchange for exactly the same type of property.
CAUTION: The Section 1031 Code was amended in 1989 rendering property outside the United States NON “Like Kind”.
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