Like-Kind Exchanges
Beaufort and Morehead City, North Carolina
The exchange of property for the same kind of property is the most common type of nontaxable exchange. To be a like-kind exchange, the property traded and the property received must be both of the following.
- Qualifying property.
- Like-kind property.
These two requirements are discussed later.
Additional requirements apply to exchanges in which the property received is not received immediately upon the transfer of the property given up. See Deferred Exchange, later.
If the like-kind exchange involves the receipt of money or unlike property or the assumption of your liabilities, you may have to recognize gain. See Partially Nontaxable Exchanges, later.
Multiple-party transactions. The like-kind exchange rules also apply to property exchanges that involve three- and four-party transactions. Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section.
Receipt of title from third party. If you receive property in a like-kind exchange and the other party who transfers the property to you does not give you the title, but a third party does, you still can treat this transaction as a like-kind exchange if it meets all the requirements.
Basis of property received. If you acquire property in a like-kind exchange, the basis of that property is the same as the basis of the property you transferred.
For the basis of property received in an exchange that is only partially nontaxable, see Partially Nontaxable Exchanges, later.
Example: You exchanged real estate held for investment with an adjusted basis of $25,000 for other real estate held for investment. The fair market value of both properties is $50,000. The basis of your new property is the same as the basis of the old ($25,000).
The information provided here has been collected from the IRS Website and is not guaranteed or endorsed by Copeland Real Estate. For more information, please contact www.irs.gov or a 1031 exchange qualified intermediary.
Back To Investors Index |
1031 Exchange FAQ |
Deferred Exchange |
Like-Kind Exchanges
Like-Kind Property |
Property Changed to Business or Rental Use
Gain or Loss From Sales and Exchanges |
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