steve's White Mountain Blog


1031 exchange , What is Like-Kind Property?

Like Kind as it appears in the IRC (Internal Revenue Code) related to 1031 Tax Deferred Exchanges (& 1033 Involuntary Conversions which I will not be getting into today) really means four things:

Location of Property: To be like kind to another property; both have to be "located" in the United States or Both have to be out side of the United States. (New York for Florida is OK, but NY for Canada is not).

Type of Property: Real Property for real property is fine, and the level of improvements on each property is immaterial. (vacant land for apartment building is ok). The like-kind exchange for personal property is much more strict and no need to get into that in a real estate blog (but check with a qualified intermediary if you are trading a backhoe for other equipment).

Use of Property: Both properties must be used by the taxpayer in a trade, business or for investment. Many of the restriction reviewed in the past were found to have personal purposes, for example a residence, vacation home or a personal automobile. This category offers the most concern and the use of the relinquished property should be looked at carefully prior to an exchange (seek advice from a qualified intermediary).

Value of Property:  Like-kind must match one another , if the prices of the two properties don't match to the extent there is a disparity, then property of an unlike kind will be subject to tax (this property is termed Boot). So the goal is to even or up your value in an exchange.

In order to avoid some of the well know pit falls or mistakes in a Like-Kind exchange follow these simple rules: Both properties must be in the United States, Both have to be the same type, Both have been used as the Taxpayer's investment (trade/ business) and both have to be comparably valued. These are the basic (somewhat simplified) elements for a successfully structured 1031 tax deferred exchange.


800-926-5653 / search


                                                                                                                                                                              Your-White Mountain New Hampshire real Estate Expert

           toll free 800-926-5653 /cell 603-381-7898

                        MLS search and Realtor web site:

                         My outside Blog:

                    Lincoln NH &  Local interest site:

    Grafton County NH MLS search

Comment balloon 26 commentsSteve Loynd • June 06 2008 12:12PM
1031 exchange What is Like-Kind Property?
Like Kind as it appears in the IRC (Internal Revenue Code) related to 1031 Tax Deferred Exchanges (& 1033 Involuntary Conversions which I will not be getting into today) really means four things: Location of Property: To be like kind to… more
Camping Story :close to home Saves more than Gas
Camping was not my thing when I was growing up, outside of Boston, as a matter of fact I would have considered a hotel without room service as roughing it. But being an avid skier I made my way to New Hampshire and Have Lived here a… more
Hey buddy pick a lane will ya (fox in the road photos)
Rte 112 Lincoln NH, we are about a mile from town but on this road the next town.. or any building is 32 miles away over the Kancamagus Highway no gas station, no food no service, just half a dozen great look out points to turn in an d enjoy the… more
Family recreation Vs. college tuition, My Favorite Vacation property…
I encourage you to use my third party stories to make your point about purchasing a vacation home. There is nothing more powerful than showing why others choose to make property purchases especially when their motivation is the time spend with… more
Lincoln New Hampshire summer attraction, Whales Tale Water park
Giant Wave Pool, Castaway cove, with three heated hot tubs and one of the several pools on the property this is where the adults tend to land away from the huge slides and the resulting splash down that ends each trip to the bottom. The… more