李晶婷律 師 事務所
Law Offices of Jingting Li, PLLC
What kind of property is qualified as 1031 exchange property
The tax deferred 1031 exchange refers to a situation where taxpayers exchanges like kind property for like kind property as opposed to a sale and reinvestment of sale proceeds. In short, property as sold or given up, also referred to “relinquished property”, in exchange for property being purchased that replaces the relinquished property, also referred to as “replacement property”.
Only certain types of property, however, can be used for the tax deferred 1031 exchange. First of all, both the relinquished and replacement properties must be for productive use of investment or for business purposes.
Secondly, the properties cannot fall under any of the following categories, as they do not qualify for tax deferred 1031 exchange treatment under the law:
Real estate not used as a residence by a taxpayer as either a primary or secondary home, but rather is used for investment or business purposes, does qualify as the type of property that can be exchanges and have tax deferral pursuant to Internal Revenue Code 1031. Therefore, this kind of property can be exchange. Furthermore, the properties can be within different geographic locations, such as New York and New Jersey.