Like kind real estate

What is like kind property? For example, an apartment building would generally be like-kind to another apartment building. Like-kind real property is broadly defined: All real estate in the United States is like-kind. Like-kind exchange treatment now applies only to exchanges of real property that is held for use in a trade or business or for investment.

An exchange of real property held primarily for sale still does not qualify as a like-kind exchange. According to the IRS, like-kind property is defined as: “ Like-kind property is property of the same nature, character or class.

Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. The types of real estate which can be exchanged are extremely broad.

Any real estate held for productive use in a trade or business or for investment – whether improved or unimproved – is considered “ like-kind. Improvements to real estate refer to the grade or quality, not the nature or character of the real property. Buy Bank Owned Homes in your State. Like - kind real property is broadly defined: All real estate in the United States is like - kind.

This is not the case.

A primary residence would not fall into this category, however, vacation homes or rental properties may qualify. For example, improved real property and unimproved real property generally are considered to be property of a “like-kind” as this distinction relates to the grade or quality of the real property. The term “like-kind” refers to the nature or character of the property, ignoring differences of grade or quality.

If you exchange real property used for business or held as investments, you can use an IRS-allowed technique known as a like - kind exchange to defer paying capital gains taxes and hold all your equity. In like - kind exchange, the money from a property sale is reinvested in another property. However, the regulations specifically state that leasehold interests in real property having a term of years or more are considered like - kind to fee interests in real property, regardless of state law.

But there are exceptions. Real property is not like - kind to personal property. Vacant land can be exchanged for a commercial building, for example, or industrial property can be exchanged for residential. Like - kind property is defined according to its nature or characteristics, not its quality or grade.

In other words, you can’t exchange farming equipment for an apartment building, because they’re not the same asset. A taxpayer may be able to exchange a conservation easement for improved real estate and begin generating a new cash flow. Easements: An easement is a right in real property. The granting of a perpetual conservation easement may be like - kind to a fee interest in real estate , since the purpose of a conservation easement is to keep the land in its natural or historical state forever. Education has always been a key component of the like - kind exchange (LKE) industry and frankly, it has always been one of the more enjoyable parts of my job.

You can exchange an apartment building for raw lan or a ranch. Properties do not need to be the same type. 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. Only real estate like-kind exchanges are allowed under the new law. The good news is that the definition of “like kind” remains very broad for real estate. Almost any two properties—a vacant lot and beach house, for example, can qualify as like-kind as long as they have comparable. AND received more than one group of like - kind properties, cash or other (not like - kind ) property.

Few real estate exchanges are multi-asset exchanges. Can I use Turbotax Deluxe, or do I need Premier? Partnership interests are personal property, and are not considered to be like kind to the acquisition of real estate , even though the underlying assets held within the partnership are in fact real property.

The Place For Your Next Investment. Find Like Kind Real Estate Exchange.