WHAT IS AN IRC SECTION 1031 EXCHANGE?
Section 1031 of the Internal Revenue Code allows an owner of property “held for productive use in a trade or business” or “held for investment” to exchange for another like-kind property and defer paying capital gain taxes. Although there are some misconceptions, this does not require exchanging a ranch for another ranch since the definition of like-kind property is very broad. For example, a property owner can exchange out of a farm or ranch and acquire: • Single family rental, duplex or triplex • Apartment or commercial property • Another farm or ranch property • Vacation home primarily “held for investment” WHAT IS NEEDED TO ACCOMPLISH THIS? A good accountant or real estate attorney is often needed to determine the value of the residence portion of the transaction and the land used in the farm or ranch operation. An experienced “Qualified Intermediary” is essential to a successful exchange. Call the 1031 exchange experts at Asset Preservation to learn more! LET TIC.COM MAKE YOUR 103
