One of the challenges with our market is that we are not selling like-kind properties
For real estate, like-kind properties
need not be of the same type or class, so long as each is used in a trade or business or held for investment.
Sometimes taxpayers exchange property that satisfies the requirements for both the exclusion of gain for a primary residence under IRC section 121 and the nonrecognition of gain on the exchange of like-kind properties
under IRC section 1031.
First, comparable market sales of like-kind properties
are used to establish value.
The IRS is quite liberal in its interpretation of like-kind properties
and views almost all real estate as similar in nature or character.
The qualified intermediary safe harbor is now available to simultaneous transfers of like-kind properties
, whereas the other safe harbors are not.
Additionally, this purchase should allow us to utilize a 1031 exchange and avoid built-in gains taxes on any sales of like-kind properties
that may occur.
It created the opportunity for undivided fractional interest in real estate and more importantly qualified TICs as like-kind properties
eligible for use in 1031 tax-deferred exchanges.
1031(b) and (c), if a transaction is not solely an exchange of like-kind properties
, any boot received (i.
The definition of like-kind properties
is different for financial accounting than for tax purposes.
The Malkins started the sales process last year, at the same time they made it well-known that they were seeking like-kind properties
to effectuate the exchange.
In Letter Ruling 200236026, a corporation sought to dispose of certain properties and reinvest in like-kind properties
with the proceeds from the sales.