First time investors, 1031 Exchange

3 Replies

Hello everybody!

So my family and I are selling our family business, and we are looking into investing in real estate in Illinois. We are going to be doing a 1031 exchange, and we will have just around $600,000 to invest. We have been weighing the options of investing in either apartment building(s) or a strip center. Does anybody have any advice, tips, or pointers? Also, is buying all cash the way to go? Or leveraging multiple properties? Just trying to pick some brains.

Thank you very much! 

It sounds like you are selling other kind of business to invest in real estate, if that the case then 1031 won't work for you.

@Nattapon Permchom , if the family business that @Zach Bajalcaliev is selling consists of both land/buildings and FFE (furniture fixtures and equipment) then 1031 is available to both.

For real estate any kind of investment real estate can be sold and exchanged for any other kind of investment real estate.

For the FFE it is much more specific, equipment must be exchanged for similar types of equipment.  e.g. restaurant equipment for restaurant or hauling trucks for hauling trucks.

@Zach Bajalcaliev as @Dave Foster mentioned you are able to do a 1031 exchange is your business is both real estate and personal property.

The IRS has a very broad term of like-kind when completing a real property 1031 exchange. Any real estate is like-kind to any other real estate. Therefore going from one building to an apartment or strip center should not be an issue. One requirement (and there are many) is that your replacement property be equal or higher in value than the one you sold.

If you are doing a 1031 exchange on personal property the IRS is very specific. Not only must the property be exchanged for the same type of property sold but it also must be used in the same manner.

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