Felice

Who should consider a 1031 exchange?

If you have real property that will net you a gain upon sale (generally property that has been substantially depreciated for tax purposes and/or has appreciated in fair market value), then you are exactly the person who should consider a 1031 exchange.

There are 5 tax classes of property:

1) Property used in taxpayers trade or business.
2) Property held primarily for sale to customers.
3) Property which is used as your principal residence.
4) Property held for investment.
5) Property used as a vacation home.

Section 1031 applies to the first and fourth categories, and potentially the fifth category. Business use is defined as, "To hold property for productive use in trade or business." Property retired from previous productive use in business can be qualifying property. Investment purpose defined as real estate, even if unproductive, held by a non-dealer for future use or increment in value is held for investment and not primarily for sale. Investment is the passive holding of property, for more than a temporary period, with the expectation that it will appreciate. Property held for sale in the immediate future is not held for investment.

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Felice “Lisa” K. Fletcher, Coldwell Banker James C. Otton Real Estate, Inc., 9626 2nd Ave., P.O. Box 68, Stone Harbor, NJ 08247-1955
Office: (800) 708-5789 - (609) 368-4766 - Cell: (215) 421-1704 - FAX: (609) 368-4533 - Email: lisa@lfletcher.com