Since 1921, the rules for qualifying and completing 1031 exchanges have gradually broadened and become less restrictive. Even so, there are dos and don’ts and several gray areas of which taxpayers should be aware. For the taxable gain to be deferred, specific key requirements must be satisfied.
There Must Be No Constructive or Actual Receipt of Exchange Funds
Exchange Must Be Equal or Up in Value
Must Follow Exchange Time Limit & Identification Requirement
Properties Must Be Held for Business or Investment Purposes
Properties Must Be Exchanged
Properties Must be “Like-Kind”: Two real estate assets of a similar nature irrespective of class or quality, that (if exchanged by the rules) can be replaced without realizing any taxable gain.
Defining Like-Kind Requirements
There are many requirements to ensure a compliant