The Essential Guide to 1031 Exchanges
By: Wendy Patton
© 2010. All rights reserved.
1031 Exchanges / Tax - Deferred Exchanges
A 1031 exchange is a tax-deferred exchange which allows an owner of business or investment property to exchange that property for new property without incurring income tax on the gain.
General Statutory Requirements
There are three general statutory requirements the taxpayer must meet in order to establish the transaction as eligible for non-recognition treatment under Section 1031.
Both the property relinquished (sold) and the property received (purchased) by the taxpayer in an exchange must be held for productive use in a trade or business, or for investment.
The property sold in an exchange and the property received in an exchange must be LIKE-KIND properties. Like kind are properties like: vacant land, rental properties, condos, single family homes, etc.
The transaction must be a reciprocal transfer of properties, as distinguished from a sale and re-investment.To continue reading this article, please provide your information below and you will be able to review all of my articles in full.