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IRS SECTION 1031, 1033 and 721 (Tax Deferred) EXCHANGE
Financial Exchange Corp. recommends each entity consult with a qualified professional experienced with IRS Section 1031 property exchanges for current individual application of IRS guidelines.
What are the
Basics of a
Advanced Exchange Techniques
Contact a FEC consultant for information about the following:
1. Exceptions to the three property rule: Identify more than just three properties.
2. Reverse exchanges: Buy a new property before selling your old one.
3. Construction exchanges: Buy bare land and develop it within § 1031 guidelines.
4. Refinancing § 1031 property: After the exchange is complete, you can take tax-deferred cash out of your new property.
5. The § 1033 exchange: Your property is taken by a governing or government authority allowing tax deferred exchange within IRS guidelines less stringent than § 1031.
6. The § 721 exchange: Tax deferred exchange for a tenants-in-Common or single property ownership investment inn to a
Real Estate Investment Trust (REIT).
FEC recommends the assistance of a professional experienced with IRS Section 1031 property exchanges for one's individual § 1031 tax-deferred exchange.
What Property Qualifies for IRS Section 1031 Exchange?
The classification of
properties exchanged determines if the property qualifies for Internal Revenue
Service Section 1031
A. Four IRS
Classifications of Real Estate:
last two qualify for IRS Section 1031 tax deferral. The first two do not
qualify. Both the
property received and the property sold must be of "Like Kind". It is
your use of the property that determines its classification. What the other
party does with the property does not affect your tax status.
Type of property depreciation (§1245 or §1250)
interest in a partnership cannot be traded for an interest in another
A partnership as an entity can exchange real estate it owns for other Like-Kind real estate.
are no income tax consequences when entering into financial transactions between
spouses. In addition, most transfers incident to a divorce are tax free.
However, transactions with a former spouse are normally subject to tax unless
they qualify for non recognition under the provisions of IRS Section 1031.
Back As An Exchange
Lessee’s interest in a lease with a term of 30 years or longer in real
property is considered Like-Kind to other real property. In addition, property
which is subject to a lease can be, even if the lease is for a term of 30 years
or longer, the subject of a tax free exchange. However the receipt of prepaid
lease payments in an exchange for a 30-year or longer lease is taxed as ordinary
income and will not qualify for tax-free exchange treatment.
personal property assets of one business can be exchanged for Like-Kind assets
of another business and will be held as a Like-Kind exchange under IRS Section 1031.
The real property is treated the same as any other exchange. The Like-Kind
requirements for personal property are much more stringent than for real
property (e.g., a truck cannot be exchanged for a car, nor can a barge be
exchanged for a cargo ship).
Homes & Properties
type of property does not qualify if it is used solely for personal use.
may qualify if rented, and must pass a use test each year.
§ 721 TIC Exchange and a Tenants-In-Common Investment
a Tenants-in-Common (TIC) investment you are a co-owner of an entire property.
You title as an owner in an undivided interest in the property along with
other investors. For example, as a TIC investor in a multi-tenant office, you
share in the ownership of the entire property, not a specific office space.
Likewise, if you invest in an apartment complex, you share in the ownership of
the entire property, not a specific unit.
Tenants-in-Common (TIC) investment
TIC investments are structured to defer capital gains taxes in accordance with
1031 exchange requirements.
Tenants-in-Common (TIC) investment§ 1031 exchange may § 721 exchange allowing tax deferral into a Real Estate Investment Trust (REIT). §
721 Exchange TIC investments are structured to defer capital gains taxes in accordance with§
1031 exchange requirements.
Contact your FEC Mergers &
Acquisitions Intermediary or see
Tenants-In-Commonfor more information.
1031 Information in PDF Format
1031 Exchange 101
Section 1031 Tax Code
Using Exchanges to Postpone Capital Gains Taxes
1031 - 721 TIC Exchanges
or visit www.1031fec.com
ASSET TRANSFER TAX SAVING
PLANNING & ALTERNATIVES
Kenneth Wheeler DBA
2401 Bay Street
Sarasota, FL 34237-8116
310 Northeast Ewing Street
Grimes (Des Moines), Iowa 50111
Information Request Form
K. B. Wheeler Member
Greater Des Moines Partnership
Financial Exchange is a non-incorporated entity
Thank you for your time and investment interest.
One's property of value inevitably transfers ownership, with or without one's wishes.
Prepare now to save your family wealth. Ken Wheeler
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June 24, 2016
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