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“Like-Kind” Property

To qualify for tax deferred exchange treatment under IRC §1031, the relinquished property must be exchanged for replacement property that is of “like-kind”. For real property exchanges the term “like-kind” refers to the nature or character of the property and not to its grade or quality. For example, it does not matter whether the real property involved is improved or unimproved because that fact only relates to the grade or quality of the property and not to its kind or class. Treas. Reg. §1.1031(a)-I(b). In essence, all real property is “like-kind” with all other real property. Generally, however, for personal property exchanges the relinquished and replacement property must both be in either the same General Asset Class or the same Product Class. To qualify for an exchange the Exchanger must have held the relinquished property for investment, or for “productive use in their trade or business”, and must intend to do the same with the replacement property.

The following are examples of “like-kind” properties:

Residential for commercial
Bare land for rental property
Fee simple interest for 30-year leasehold
Single family rental for multi-family rental
Non-income producing raw land for income producing rental property
Rental mountain cabin for a dental office in which the Exchanger intends to practice
Corporate twin-engine aircraft for a corporate jet
Mitigation credits for restoring wetlands for other mitigation credits
Buses for buses
Garbage routes for garbage routes
Livestock of the same sex (Note: livestock of different sexes are not of "like kind")

All investment strategies have risks. Past performance and/or forward statements are never an assurance of future results. Only a sponsor’s Private Placement Memorandum or Prospectus is controlling.

Nothing contained herein shall constitute an offer to sell or a solicitation of an offer to buy any security. Such offers may only be made by written prospectus and only in a jurisdiction where the security is duly registered or exempt from registration therein.