WHAT IS LIKE KIND PROPERTY?

IRC §1031 states that relinquished and replacement property must both be of “like-kind” nature. In regards to Real Estate 1031 Exchanges, all real property is “like-kind”. As long as the property is being used for investment and income purpose and not as a primary residence, it can be exchanged. For example, a condominium can be exchanged for a ranch. Here are types of property which IRC recognizes to be of “like-kind” nature:

• Single Family Rentals
• Farms/Ranches
• Office/Commercial
• Motels/Hotels
• Golf Courses
• Some Recreational Properties
• Multi Family Rentals
• Raw Land
• Tenant-in-Common(“TIC”) programs
• Retail
• Industrial
• Leasehold interest of 30 years or more

Like-Kind Personal Property

As far as “like-kind” personal property however, IRC codes become more restrictive. For example, an automobile can be exchanged for another automobile and manufacturing equipment can be exchanged for manufacturing equipment. This type of exchange can be used to relocate a business, replace outdated technology or improve machinery.

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