What Property Does Not Qualify for a 1031 Exchange?

Although section #1031 has been around since the 1920s, in 1986 the government saw fit to revise the code to exclude certain types of property from exchange qualification. Before you embark on a 1031 exchange, be sure to understand whether your relinquished and replacement properties qualify.

Property that does not qualify for a 1031 exchange:

• A personal residence (although if you use a portion of your home for business or investment use, that portion may qualify)
• Stock/inventory used in trade
• Stocks
• Bonds
• Notes
• Securities/Indebtedness
• Partnership Interests
• Goodwill in a business
• Property held primarily for sale (e.g. flips, spec homes, developed lots)

Understanding before you begin what property will – and won’t – qualify for your proposed exchange, will save you headaches later on with the IRS.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.