What Is An IRC 1031 Tax-Deferred Exchange? |
Basically, an Internal Revenue Code 1031 Tax Deferred Exchange (also
known as a "Starker" Exchange) allows a taxpayer to "defer" the paying
of taxes on a "gain", when an investment property is sold ("relinquished")
and "replaced" with another property, while following certain guidelines. The
rules state that, "No gain or loss shall be recognized on the exchange of
property held for productive use in a trade or business or for investment, if
such property is exchanged solely for property of "LIKE-KIND", which is to
be held either for productive use in a trade or business or for investment". |
What Does The Term "Like Kind" Mean? |
"LIKE-KIND" does not refer to the nature, character, or type of property.
Instead it addresses the "intended use". Provided the property is initially
acquired and held "either for productive use in a trade or business or for
investment", it can qualify as a suitable "replacement property" (the property
you'll purchase) under IRC Section 1031. The tax code also lists items that
are NOT considered "like-kind"... they include: stock-in-trade or other
property held primarily for sale, stocks, bonds or notes, other securities or
evidences of indebtedness, interests in partnerships, certificates of trust or
beneficial interest, and real estate located outside the United States. |
Additional 1031 Exchange Pages |
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