Discussion:1031 exchange for unused commercial real estate ?
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Discussion Forum Index --> Basic Tax Questions --> 1031 exchange for unused commercial real estate ?
Discussion Forum Index --> Tax Questions --> 1031 exchange for unused commercial real estate ?
| 30 June 2008 | |
| Can an individual who owns a piece of commerical real estate but has never reported any rents, taken any depreciation or used the real estate to generate any income do a 1031 exchange for that property ( they have made some improvements). | |
| 30 June 2008 | |
| Larry, is there any publication that addresses this issue. or can you expound a little, I thought the 1031 exchnage had to be done with a business asset (income producing asset). | |
| 30 June 2008 | |
| assuming both relinquished and replacement properties were/are to be held for investment and otherwise qualify | |
| 30 June 2008 | |
| kevin does it matter that they are not really in the business of buying and selling real estate for investment. they own and operate a couple of pizza shops.. this property was purchased afew years ago with the thought of opening up a nicer restaurant at athat location however it never materialized. So they are tryiing to sell this property but as mentioned before they have never reflected it anywhere on their taxes before.. no rents recieved,and no depreciation taken.. WOuld it still qualify for 1031? and if so should they sere a qualified intermediary before selling the place? | |
| 30 June 2008 | |
| if they were holding this property in the hopes of future appreciation or income then it qualifies, they need to be talking to a QI now so that they can put the proper words in their contract to 'sell' the (future) relinquised property
oh, I suppose I should say that NO PERSONAL USE also applies - they didn't hold this as a 2nd home or vacation spot to pitch a tent for the summer. | |
| 30 June 2008 | |
| by the way, 'stock in trade' or inventory does NOT qualify
so if this was considered 'inventory' by a dealer in real estate, it wouldn't qualify Do a search on 1031 Exchange and read up on them some more | |
Puttmaster (talk|edits) said: | 20 August 2008 |
| TAX CAT - It is always so important to look at the original intent of the relinquished property for the exchange. If the original intent was to use the property and expand the business, great. The related question would be the type of financing they used to acquire the property, personal use...etc. They will always have the burden of proof as to showing investment intent. It typically isn't okay to just hold a property and hope it appreciates without showing an attempt to rent. | |
RoyDaleOne (talk|edits) said: | 20 August 2008 |
| Reg 1031(a)-1
http://www.taxalmanac.org/index.php/Treasury_Regulations%2C_Subchapter_A%2C_Sec._1.1031%28a%29-1 | |
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