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Q. What is Like Kind Property?
A. When exchanging real estate, this question can be easily answered. All
real estate is "like kind" to all other real estate. Thus, you can
exchange raw land for a shopping mall, you can exchange a rental townhouse for a
farm, and you exchange a strip shopping center for a condominium.
The question gets more technical, and more difficult to answer, if you are
exchanging anything besides real estate. As long as you are investing in real
estate, however, all real estate is like kind to all other real estate.
Note, however, that to do an exchange, you must exchange property "held
for productive use in a trade or business or for investment" for like kind
property "to be held either for productive use in a trade or business or
for investment." IRC 1031(1). See our notes on What
does held for investment mean?
Anything you receive in an exchange which is not like kind property to be
held for investment is "boot" and may be taxed. See our notes on What
is Boot?
Rice & Stallknecht, P.C. would be honored to
assist you.
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