Real estate may seem easy to define and differentiate from personal property. In a 1031 exchange, however, the details matter. Section 1031 applies only to real property, and determining what qualifies isn’t always as simple as identifying something as part of a property.
Land and buildings are clear examples of real property. Other improvements and structures can be more complicated, particularly when they don’t fit neatly into a specific category.
In those situations, the facts surrounding the property become critical:
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How is the item connected to the property?
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Was it intended to stay where it was installed?
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Can it be removed without causing substantial damage?
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What would it take, practically and financially, to relocate it?
An asset can appear to be part of the real estate without necessarily being treated as real property for 1031 purposes.
If a transaction includes specialized structures, equipment, fixtures, or other unusual improvements, it’s worth addressing their classification early in the process to avoid any last-minute headaches.
Contact CPEC1031, LLC to Start Your Like-Kind Exchange
If you’re ready to start your like-kind exchange, contact the qualified intermediaries at CPEC1031, LLC today. Our team has decades of experience facilitating forward exchanges, reverse exchanges, and construction exchanges across the United States. We can help guide you through the entire exchange process from beginning to end, making sure you are well-equipped to defer all of your capital gains taxes on the sale of your investment or business property. Reach out to us today at our Twin Cities office to set up a time to chat about the details of your next 1031 exchange.
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Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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