NON-QUALIFYING PROPERTY in 1031 exchange refers to properties that do not meet the requirements for a tax-deferred exchange under IRC Section 1031. In a 1031 exchange, the properties being sold and purchased must be of “like-kind,” meaning they must be used for similar purposes and be of similar value.
Key-Takeaway
- Understanding the requirements for a like-kind exchange is important for successfully completing a 1031 exchange.
- Not all properties are eligible for a 1031 exchange, and it is crucial to consult a tax professional to ensure the properties involved meet the criteria.
Example
- Residential property (primary residences)
- Inventory or stocks
- Raw land
- Personal property (cars, boats, art, etc.)
Tips
- Consider working with a qualified intermediary to facilitate the exchange process and ensure that all requirements are met.
- Be aware of the time limitations and follow the 45-day and 180-day deadlines for identifying and acquiring replacement property.
Recommendations
- It is recommended to consult a tax professional to ensure the 1031 exchange is executed correctly and to avoid potential tax consequences.
- It is also recommended to carefully consider the properties involved in the exchange and ensure that they meet the criteria for a like-kind exchange.
