1031 Exchange Like Property

Real Estate Agent · Milwaukee, WI · Member since 2017 · 6 posts · 0 votes

I have a client that has an investment property that is a duplex and they are selling that duplex and want to do a 1031 Exchange for a multifamily apartment building with 26 units. Would this exchange qualify? The IRS website says it is possible for a "like-kind" exchange. Like-kind property is property of the same nature, character or class. It doesn't sound like it would be, but I have some connections that say it can be done. Let me know what you all think.

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Justin F.

Rental Property Investor · Chicago · Member since 2018 · 38 posts · 37 votes

YES - "like-kind" is broader than you are thinking.

*This post does not constitute tax advice, nor financial advice, speak with a professional*

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Justin F.
Rental Property Investor · Chicago · Member since 2018 · 38 posts · 37 votes
8y
YES - "like-kind" is broader than you are thinking.
*This post does not constitute tax advice, nor financial advice, speak with a professional*
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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
8y
It works have your client work with an accountant who may want to connect with the exchange folks. I know mine does.
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Aaron Ziebart
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Real Estate Agent · Milwaukee, WI · Member since 2017 · 6 posts · 0 votes
8y
Thank you, I will work with my client and let them know that it may be possible to defer paying taxes with this exchange.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
Yes it qualifies.....real estate held for investment....it could be a strip center, warehouse, whatever.
@Dave Foster can walk your client thru it, he knows more about 1031’s than90% of CPA’s.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
8y
@Aaron Ziebart, I'll second third and fourth everyone here. Property that qualifies is property that has been purchased with the intent of holding for productive use in business, for trade, or for investment. It is not the type of property that matters it is the use. Any kind of investment property for any other type of investment property. There's some other restrictive requirements to pay attention to though. And valuation is key. But if they're going from a duplex to a MF building they're probably fine on that one.
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