What Is "Like-Kind" Property in a 1031 Exchange?
Like-kind property is a requirement for a 1031 exchange. In order to be allowed to defer taxes paid on income earned from the sale of current property, the new property must be "like-kind" to the current property. This means that the new property must be generally of the same character or type as the old property. The owner can exchange equipment for equipment, for example, but not equipment for real estate.
However, real estate (land) can be exchanged for other real estate. It does not matter what type of real estate it is, and the owner can exchange empty land for an apartment building. You cannot exchange personal property, such as a home.
If the property is not "like-kind," you will probably have to pay the full capital gains taxes on it and will therefore not get the benefit of the 1031 exchange.
- What Is a 1031 Exchange?
- How Do I Complete a 1031 Exchange Application?
- How Do I Choose a Qualified Intermediary for a 1031 Exchange?
- What Type of Property Can I Swap in a 1031 Exchange?
- What Are Some Advantages Provided by a 1031 Exchange?
- What Is the Timeline for a 1031 Exchange Application?
- How Can I Use a 1031 Exchange to Stop Managing Property?
- How Can I Take Advantage of a 1031 Exchange?
- How Long Do I Have to Complete a 1031 Exchange?
- What Is the "Boot" in a 1031 exchange?
- How Do I Fully Defer the Tax on the Sale of My Property through a 1031 Exchange?
- What Is a Delayed 1031 Exchange?
- What Is a Reverse 1031 Exchange?
- Do I Need an Intermediary for a 1031 Exchange?