Personal Property as a 1031 Exchange While most 1031 exchanges involve real property, personal property may be exchanged as well. Personal property does not mean property used for personal gain because IRC 1031 requires all property, whether real or personal, to be used for business, trade or investment.

What is like-kind exchange treatment for personal property?

Properties are of a like-kind if they’re of the same nature or character, even if they differ in grade or quality. All real property in the United States, improved and unimproved, remains like-kind to all other domestic real property.

Do you have to report real property in like kind exchange?

However, real property in the United States is not of like-kind to real property outside the U.S. To report a like-kind exchange, taxpayers must file Form 8824, Like-Kind Exchanges, with their tax return for the year the taxpayer transfers property as part of a like-kind exchange.

When do you qualify for like kind exchange?

A transition rule in the new law allows like-kind treatment for some exchanges of personal or intangible property. If the taxpayer disposed of the personal or intangible property on or before Dec. 31, 2017, or received replacement property on or before that date, the exchange may qualify for like-kind exchange treatment.

Who is eligible for 1031 like kind property exchange?

Any tax payer who uses a property in their business or as an investment can take advantage of the 1031 exchange. In a typical IRS qualified §1031 like-kind property exchange, investors defer paying capital gains, depreciation recapture, and income taxes on commercial investment property when it’s sold.

What are some examples of like kind exchanges?

Most common like-kind exchanges of personal property included those of aircraft, boats, automobiles, trucks, and machinery or equipment. A taxpayer could benefit from deferring the gain on the like – kind exchange of personal property and adjust the basis of replacement property under the former rule.