Is a 1031 for Investment property only? The short answer is yes. If you are looking to do a 1031 tax exchange when you buy or sell a property, be sure to consult and hire a 1031 exchange company and work closely with your accommodator. There are strict rules and regulations, time restrictions and other things you must be aware of and adhere to. If you are looking to buy or sell a property in the Coachella Valley, give local resident and agent, Kim Kelly a call at 760-285-3578.
From the IRS Fact sheet: To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case of a taxpayer simply selling one property and using the proceeds to purchase another property (which is a taxable transaction). Rather, in a deferred exchange, the disposition of the relinquished property and acquisition of the replacement property must be mutually dependent parts of an integrated transaction constituting an exchange of property. Taxpayers engaging in deferred exchanges generally use exchange facilitators under exchange agreements pursuant to rules provided in the Income Tax Regulations. .
(courtesy of Exchange Resources, Inc.) Is a 1031 for investment property only? We are regularly asked if owner-occupied or personal-use property is exchangeable. It’s important to remember that the intent of the §1031 Exchange must be specifically for property held for investment purposes. However, there are some situations where investment and personal use might conflict or even overlap.
The most common example would be a duplex, a multi-unit property, or a property with an ADU where the owner occupies one of the units. The essential questions for the taxpayer to ask are:
- Have I been reporting a portion of the property and any income from it as investment property?
- Have I been using a portion of the property for ‘Productive Use’ in a trade or business OR renting the portion at FAIR MARKET RENT.
If YES, then that portion could be eligible for a §1031 Exchange…
This 9.7 acre organic date farm would be a great 1031 business exchange. Offered at only $795,000!