It’s a common misconception that 1031 exchanges only apply to real estate. The truth is that section 1031 of the IRC also applies to items of personal property. However, there are some additional rules and regulations you need to understand when considering a personal property exchange. Drop us a line today to talk with one of our Bemidji qualified intermediaries for help with your 1031 exchange of personal property – 877.373.1031.
Like-Kind Exchanges of Personal Property
Personal property 1031 exchanges are pretty similar to real property exchanges. You need to have held your property for investment or business purposes (not for personal use). You need to exchange into new property that has greater value, equity, and debt. And you need to complete your exchange within the 180 day time period.
Where personal property exchanges get more complex is the like-kind requirement. In any 1031 exchange you need to exchange out of and into like-kind property. The IRS defines most real estate as like-kind, so you can exchange an apartment building for another apartment building in Bemidji, or a hotel in another Minnesota city. As long as it’s real estate used for business purposes located within the US, it’s probably considered like-kind. When it comes to personal property, you have to be much more specific. So you can exchange gold coins for other gold coins, but you can’t exchange those gold coins for a painting. Items of personal property need to be listed under the same general asset class in order to be deemed like-kind.
Bemidji Like-Kind Exchange Company
Personal property exchanges present a lot of potential pitfalls. If you don’t abide by the strict rules set out by the IRS, they may not recognize your exchange and you might get hit with a substantial tax burden. To avoid such a nightmare scenario, talk with a 1031 qualified intermediary early in the process. An experienced 1031 facilitator can help you through all of the different aspects of your exchange. You can contact our Bemidji like-kind exchange experts any time for help with your personal property exchange. We are available to answer all of your questions and walk you through the Minnesota 1031 exchange process – 877.373.1031.