1031 exchange question

5 Replies

Hello all,

I have a large sum of money invested in a handful of Paintings.  Is there a way that i could 1031 exchange my sale from my painting right into a property??  Seems like you should be able too but i haven't been able to find any information on it.   If any one has any insight it would be greatly appreciated! 

@Nathan Hood prior to changes in the Tax Cut and Jobs Act, taxpayers were able to exchange any like-kind [personal or rea]l property for like-kind (artwork for artwork). Now, the 1031 provisions are exclusive to real property (i.e. real estate).

Depending on the value, you might wish to explore the Deferred Sales Trust strategy which allows for the deferral of gains taxes, while using the proceeds in any manner you wish.

For something like that it would be better to look into an Opportunity Zone to eliminate your tax gains altogether. I do not believe you can do it for real estate for 1031 Exchange. 

@Kyle Kadish

With a Deferred Sales Trust, the sales proceeds are held in the Deferred Sales Trust. The seller will only have limited ability to direct the investments of the Trust and they certainly cannot be used in any manner they wish. A Monetized Installment Sale, on the other hand, works as you described. It will provide the seller with funds that may be invested in any manner they wish.