MIXED USE in 1031 exchange refers to the exchange of real estate properties that have both residential and commercial components. For example, a building with apartments on the top floors and retail space on the bottom floors is a mixed-use property.
- Mixed-use properties can be eligible for a 1031 exchange, but the IRS has specific rules regarding the use of the property to ensure that the exchange meets the requirements for tax-deferred treatment.
- The residential and commercial components of the property must both be income-producing and be used for business or investment purposes.
- Consult a qualified intermediary or tax professional to ensure that the exchange meets all IRS requirements.
- Make sure that the replacement property is a “like-kind” property to the one being sold, as required by the 1031 exchange rules.
- Carefully consider the value and potential income-producing capacity of the replacement property before making a decision to complete the exchange.
- Consider the long-term implications of the exchange and make sure that the replacement property meets your investment goals and objectives.
- Be aware of the timeline for completing the exchange, as there are strict deadlines that must be met to qualify for tax-deferred treatment.
- Consider seeking out expert advice from a tax professional or real estate expert to ensure that the exchange is completed successfully.
- Research the market and rental income potential of the replacement property before making a decision to complete the exchange.
- Make sure to fully understand the terms and conditions of the exchange, including any fees or costs associated with the transaction.