What is a 1031 Exchange?
The Internal Revenue Code* provides that a taxpayer may sell real property held for productive use in a trade or business or for investment and defer payment of capital gains tax, if that taxpayer uses the proceeds to acquire a like-kind replacement property.
- Capital gains tax is significant
- Reinvestment into replacement property allows taxpayer to leverage dollars that would otherwise be spent on taxes
- Allows for non-income producing property to be replaced with income-producing property
- Allows taxpayer to diversify portfolio and minimize risk
What Old Republic Exchange Does
- Act as Qualified Intermediary (QI), as required by the Treasury Regulations
- Prepare all documents required for the exchange
- Consult with your tax advisor
- Execute closing documents
- Hold the exchange proceeds to avoid constructive receipt of funds
- Coordinate with the closing agents, real estate professional, and tax and legal advisors
As a result of tax reform legislation, 1031 exchanges are no longer allowed on personal property, effective January 1, 2018. Below are examples of like-kind real property transactions that still qualify for IRC Section 1031 treatment:
- Commercial building for a ranch or farm
- A leasehold interest of 30 years or more for a fee interest
- Rental house for farmland
- Improved real property for unimproved real property
- Conservation easement in one farm for fee interest in another farm
- A utility easement for a utility easement
For 1031 exchange assistance in Western states, please call 800-738-1031
For 1031 exchange assistance in Eastern states, please call 866-543-1031
Learn more about Old Republic Exchange, the benefits of 1031 exchanges and more by visiting their website.Visit Old Republic Exchange
*IRC §1031 provides that no gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.
This material is for educational purposes only and does not constitute legal advice. We assume no liability for errors or omissions. As a Qualified Intermediary, Old Republic Exchange, its officers and employees do not provide, and this communication is not intended to be, tax or legal advice.