WHAT TYPES OF REAL PROPERTY QUALIFY FOR A SECTION 1031 EXCHANGE?

The simple answer to that question is:   all types of real estate qualify for exchange purposes.  But both the property being given up, the relinquished property, and the property being received, the replacement property, must have been an investment or used in a trade or business.  The properties must be "like kind".  For a more thorough discussion on "like kind" go to our blogs of August 7, 2008 and August 11, 2008.  Simply put, any type of real estate is "like kind" to any other type of real estate.  "WOW" was the response given to me by a Realtor who never realized that her client could exchange its farm land for an office building.  For example purposes, you can exchange any of the following for each other, as long as they qualify as held for investment or used in a trade or business:  raw land, hotels, single family homes, office buildings, shopping centers, factories, farmland, rock quarries, leases that have 30 or more years remaining (yes most states delineate 30+ year leases as ownership of real estate), commercial buildings, etc.  We will discuss personal property exchanges in the next blog--FYI--personal property exchanges are a lot more restrictive on qualification for Section 1031 purposes.