All about Like Kind Tax Deferred Exchanges
This Like Kind Tax Deferred Exchange Lens is dedicated to educating and informing real estate investors and their advisors on the benefits of, and proper use of, like-kind tax-deferred exchange transactions so that real estate investors can make better informed investment decisions.
Technical, relevent and up-to-date information on forward, reverse and build-to-suit (improvement) like kind tax deferred exchange strategies and structures will be provided to assist investors in properly deferring their depreciation recapture taxes and capital gain taxes into the future.
This Like Kind Tax Deferred Exchange Lens is written, updated and sponsored by Exeter 1031 Exchange Services, LLC. Exeter 1031 Exchange Services, LLC is a member of The Exeter Group of Companies.
Technical, relevent and up-to-date information on forward, reverse and build-to-suit (improvement) like kind tax deferred exchange strategies and structures will be provided to assist investors in properly deferring their depreciation recapture taxes and capital gain taxes into the future.
This Like Kind Tax Deferred Exchange Lens is written, updated and sponsored by Exeter 1031 Exchange Services, LLC. Exeter 1031 Exchange Services, LLC is a member of The Exeter Group of Companies.
Concise Summary of Like Kind Tax Deferred Exchange Structures
Simultaneous Like Kind Tax Deferred ExchangeThe relinquished properties and replacement properties will close concurrently in a simultaneous like kind tax deferred exchange.
Forward or Delayed Like Kind Tax Deferred Exchange
The relinquished property closes first and the replacement property closes later within the prescribed like kind tax deferred exchange deadlines.
Reverse Like Kind Tax Deferred Exchange
The replacement property is acquired and held by an Exchange Accommodation TitleHolder first and the relinquished property is sold later within the prescribed like kind tax deferred exchange time frames.
Improvement Like Kind Tax Deferred Exchange
Your like kind tax deferred exchange proceeds from the sale of your relinquished property will be held by your Qualified Intermediary and will be used to acquire replacement property and to improve the replacement property.
Personal property Like Kind Tax Deferred Exchange
Personal property can also be exchanged for other personal property of like-kind or like-class. Like kind is much more specific when personal property is involved.
Like Kind Exchange Qualifications
Qualified Intermediary
You must select your Qualified Intermediary and have them assigned into your relinquished property (sale) transaction before your sale transaction closes in order to preserve the like-kind tax deferred exchange benefits of the 1031 exchange.
Qualified Use Property
Your relinquished property (sale) and your like-kind replacement property (purchase) must be held for rental or investment or used in your trade or business in order to qualify for 1031 exchange treatment. You must have the intent to hold the properties for investment. Properties held for sale will not qualify for 1031 exchange treatment.
Like Kind Replacement Property
The like-kind replacement property acquired in your like kind tax deferred exchange must be "like-kind" to the relinquished (sold) property. It is important to understand that ANY real property is like-kind to ANY other real property as long as both properties are held for rental or investment or used in your business. Like-kind does NOT mean condo for condo or apartment for apartment.
You must select your Qualified Intermediary and have them assigned into your relinquished property (sale) transaction before your sale transaction closes in order to preserve the like-kind tax deferred exchange benefits of the 1031 exchange.
Qualified Use Property
Your relinquished property (sale) and your like-kind replacement property (purchase) must be held for rental or investment or used in your trade or business in order to qualify for 1031 exchange treatment. You must have the intent to hold the properties for investment. Properties held for sale will not qualify for 1031 exchange treatment.
Like Kind Replacement Property
The like-kind replacement property acquired in your like kind tax deferred exchange must be "like-kind" to the relinquished (sold) property. It is important to understand that ANY real property is like-kind to ANY other real property as long as both properties are held for rental or investment or used in your business. Like-kind does NOT mean condo for condo or apartment for apartment.
Amazon Book Selections
Books and Publications on Like Kind Tax Deferred Exchanges
We've taken the liberty of compiling a list of books and publications on Like Kind Tax Deferred Exchanges that are available through Amazon.com. You can also download a free PDF copy of the Section 1031 Tax Deferred Exchange Reference Manual written, published and distributed by Exeter 1031 Exchang Services, LLC.
1031 Exchanges Made Simple by Michael P. Owens, Michael D. Fox
1031 Exchanges Made Simple is a complete and pract more...0 points
Tax-Free Swaps: Using Section 1031 Like-Kind Exchanges to Preserve Investment Net Worth (Nuts & Bolts series) (Nuts & Bolts series) by Bradley T. Borden
A goal of most property owners is to preserve the more...0 points
The Tax-Free Exchange Loophole: How Real Estate Investors Can Profit from the 1031 Exchange by Jack Cummings
Discover the Greatest Investment Tool of All Time! more...0 points
Practical Guide to Like-Kind Exchanges Under Code Section 1031 (Second Edition) (2007) by Nancy N. Grekin
CCH's Practical Guide to Like-Kind Exchanges Under more...0 points
Like-Kind Exchanges Under Code Section 1031 by Nancy N. Grekin
Code Section 1031 like-kind exchanges have an esse more...0 points
Like Kind Exchange Deadlines
45 days to identify like-kind replacement property.180 days to complete the like kind tax deferred exchange
Like Kind Tax Deferred Exchange Identification Rules
Three Property Rule
Investors may identify up to three (3) potential like-kind replacement properties, without regard to their fair market value. The limit is on the number of properties.
200% of Fair Market Value Rule
Investors may identify any number of potential like-kind replacement properties, but the total fair market value identified cannot exceed 200% of the fair market value of the relinquished (sale) properties. The limit is on the fair market value of the properties.
95% Exception
There is no limite to the number or amount of property identified. Investors can identify as many like-kind replacement properties as they want, but must actually acquire and close on 95% of the fair market value identified.
Like Kind Exchange Reinvestment Requirements
Trade Equal or Up In Value
The investor must exchange equal or up in value based on the net sales price and total purchase price so that the total purchase price of your like-kind replacement properties is equal to or greater than the net sales price of your relinquished properties. It is important to note that it has nothing to do with your equity.
Reinvest 100% of Net Proceeds
100% of the investor's net proceeds or cash proceeds generated by the sale of the relinquished property must be reinvested into like-kind replacement property. Cash can be pulled out, but it will always be taxable.
Obtain Equal or Greater Debt
The difference between the total purchase price(s) and the net proceeds reinvestment in the like-kind replacement properties will always be the correct amount of new debt to place on the acquired properties, unless the investor wishes to put more cash out of pocket in to the transaction and obtain less debt.
The investor must exchange equal or up in value based on the net sales price and total purchase price so that the total purchase price of your like-kind replacement properties is equal to or greater than the net sales price of your relinquished properties. It is important to note that it has nothing to do with your equity.
Reinvest 100% of Net Proceeds
100% of the investor's net proceeds or cash proceeds generated by the sale of the relinquished property must be reinvested into like-kind replacement property. Cash can be pulled out, but it will always be taxable.
Obtain Equal or Greater Debt
The difference between the total purchase price(s) and the net proceeds reinvestment in the like-kind replacement properties will always be the correct amount of new debt to place on the acquired properties, unless the investor wishes to put more cash out of pocket in to the transaction and obtain less debt.
The 1031 Exchange Institute
Your Complete Resource for 1031 Tax Deferred Exchange Information and Beyond
Welcome to The 1031 Exchange Blog. This 1031 Exchange Blog is brought to you by The 1031 Exchange Institute to help educate and inform real estate investors and their advisors so that they can make better informed real estate investment decisions. The 1031 Exchange Blog will cover all things related to likd kind exchanges, including delayed or forward, reverse and improvement like kind exchanges.
Like Kind Exchange Blogs
Like Kind Tax Deferred Exchange Blogs and Discussion Boards
Discuss Section 1031 Exchanges on the Following Websites
- 1031 Exchange Accommodator
- 1031 Exchange Qualified Intermediary for all types of 1031 exchanges in all 50 states, including forward 1031 exchange, reverse exchange and improvement 1031 exchange strategies.
- The Exeter Discussion Board
- Discuss real estate related topics, including 1031 exchanges, Title Holding Trusts, Deferred Sales Trusts, Commercial Real Estate, Self-Directed IRAs, real estate financing, and much, much more.
- The 1031 Exchange Blog by The 1031 Exchange Institute
- Review comments by leading experts on 1031 exchanges. You can also share thoughts and successes and ask questions on the 1031 exchange discussion board as well.
- The Exeter Learning Institute
- The Exeter Learning Institute is dedicated to educating and informing real estate investors on the benefits of 1031 tax-deferred exchanges.
- 1031 Tax Deferred Exchange Seminars
- Looking for like kind tax deferred exchange webinars, workshops, seminars and training programs? Here is a link to upcoming 1031 exchange events.
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