As far as Qualified Property is concerned, below mentioned is an in-depth look at it –
Your relinquished and replacement properties will be suitable for 1031 exchange treatment if they are deemed to be qualified use property.
Above all other points, the most important one is that your properties or assets must be used in your trade or business or held for investment. Which is due to reason being if the Properties that are not held for investment or used in your trade or business, for example: if they are being held for sale then it will not qualify to be treated for 1031 Exchange . Once you take a closer look into the process of what qualifies and what does not qualify, you will find a lot of different opinions on this issue because the codes and regulations are not adequately defined held for investment or use in a business.
Intent to Hold
A lot of investors with their advisors will be delayed for a longer time duration than the usual duration it should take to hold title to your property while trying to decide whether if it would be considered qualified use property hence qualify for 1031 exchange treatment. The real issue here is not concerned with the time duration.
The investors intend to hold the properties for investment purposes is what really matters. It must be your ability to prove that you had the intent to keep your relinquished properties and likewise your like-kind replacement properties for investment or use in your trade or business should you be selected for analyzing.
The best ways to showcase your intent to hold is to make sure that your properties be maintained long enough so that you can easily prove you had the intention to hold for investment.
Properties Held for Investment
Properties possessed for investment purposes can be any property or asset that you acquire and maintain for income generation or for capital appreciation. Properties held for investment do not have to generate income or cash flow. They simply must be held for investment to be eligible for 1031 exchange treatment.
Properties Used in Your Trade or Business
Another favorite way in which you can also acquire and use a property or asset in your trade or business, and it will pass for tax-deferred exchange treatment. You might purchase a commercial office building to operate your business from or acquire manufacturing equipment to produce or manufacture your product.
Properties Held for Sale
Such Properties or assets acquired and held for sale will not qualify as used in a trade or business or possessed for investment and will typically not be suitable for 1031 exchange treatment. The acquisition of property for the sole purpose of fixing it up and then selling it, or what is also referred to as flipping property, is a classic example of a property being held for sale and not held for investment. Obtaining a multi-family property and converting into condos or something similar and then selling individually is an excellent example of property held for sale and not for investment.
In addition to all mentioned previously, personal property also qualifies for 1031 exchange treatment if the qualified use property requirements are met. State law generally dictates the determination of whether a property is classified as real or personal property.
Domestic Property versus Foreign Property
Property sold in one state can be exchanged for property located in another state, if they are located within the US. Domestic property cannot be exchanged for non-domestic property. Since specific state and/or local exceptions may apply, it is best to consult with the local legal and tax advisor. Get current 1031 exchange property list.
Engage our services for a profitable 1031 Exchange and defer Taxes
1031 Exchange enables your money to churn the maximum profit for you. However, the exchange process is extremely complex in nature, and it would be wise to seek guidance from expert professionals. We have extensive experience in handling highly profitable exchanges for our varied client base.
For consultation and assistance regarding 1031 exchange and to get 1031 exchange property list call – 888-993-0590 or email us at info@1031Xchange.com.