Qualified Use Property
Properties, both relinquished and replacement, qualify for a 1031 exchange if they fall into the category of property known as qualified use . However, there are a great many property issues and requirements that affect a given asset or property’s eligibility for qualified use ; paramount among them is that the asset or property MUST be held for investment or used in the Investor’s business. Otherwise, they do not qualify for a 1031 exchange.
The amount of time that the title of a given property is held by the Investor while determining if it falls into the qualified use category not an issue; the intent to hold relinquished properties and like-kind replacement properties for investment or use in business is the crux of the matter, and holding said properties for sufficient time as to prove the Investor’s intent to hold for investment is the way to go.
Properties that qualify as an investment type can be of any kind that has the potential to create income for the Investor, including renting, leasing or capital appreciation; business properties can be an office building that houses the Investor’s company, or machinery and other sundry equipment used in the Investor’s business.
Likewise, properties purchased or traded and held to be sold do not qualify for a 1031 exchange, but personal property qualifies if the Qualified Use Property Requirements and Like-Kind Replacement Property Tests are met. However, property must in all instances be like-kind; real and personal properties cannot be exchanged for one another. Properties do not have to be located within the same state, but must be within the confines of the United States; foreign (non-U.S.) property can only be traded for foreign (non-U.S.) property.
Disclaimer: 1031 exchange made simple does not guarantee the performance of the QI's in our referral network and we can not be held liable for any misrepresentations or mistakes in regards to a 1031 exchange by one of the QI's that we refer to you. 1031 Exchange made simple does not provide tax advice nor can we make representations regarding the tax consequences of an exchange transaction. 1031 Exchange made simple is a 1031 QI Referral Network. 1031 made simple is not responsible (in any way) for the performance, creditability, and financial condition of any QI in our network. In this new economic environment it is imperative that all potential 1031 exchange customers do their own due diligence and research on any QI that they may use, on a 1031 exchange. Please verify and check the validity of the Bonding and Insurance of your QI. It may be wise to have your 1031 exchange accounts set up as separate, individual customer accounts. Our web site is to be used as a information based web site only. All parties doing a 1031 exchange must consult their tax advisors or attorney for this information.
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