A common question is whether a 1031 exchange is only for real estate? The short answer is yes. In the past, 1031 exchanges could be used for all types of investment property, such as automobiles, aircraft, and other things, to avoid capital gains taxes on transactions as long as they were like-kind. In December of 2017, however, the Tax Cuts and Jobs Act of 2017 was passed, and since the beginning of 2018, a 1031 exchange is only valid when buying and selling real estate. Only “real property” – meaning real estate — can be used in a 1031 exchange.
This is the only change with this act, however. The other parts of the 1031 exchange process — 45 day rule, 180 day rule, and the use of a qualified intermediary — are still in effect. If one sold their investment personal property on or before December 31, 2017, then he or she can still acquire replacement property during 2018, even if the exchange wouldn’t currently be valid under the new law. If this is the case, the 1031 exchange can proceed as it would in previous years, with the same 180 day deadline restriction.
For most people, this change in the law won’t make much of a difference because most 1031 exchanges are for real estate properties anyway, although one must be aware that he or she can no longer use it for other types of property.
At Brazos 1031 Exchange Company, we’re ready to help you with any questions you have. We would be glad to serve as your qualified intermediary. Call us today at 888-508-1901 or contact us from our website to get started on your 1031 exchange.