Tax deferred exchanges can involve real property
or personal property. The like-kind provisions for real property
are quite broad, whereas the like-kind provisions for personal
property are very restrictive. Understanding the difference is
important to ensure your exchange will qualify by meeting the
IRS requirement for like-kind.
Real property
With the exception of primary residences, you can exchange any
type of real property for another. Examples of real property includes:
raw land, single-family residential rentals, hotels, multi-family
dwellings, factories, commercial office buildings, shopping centers,
farmland, leasehold interests of 30 years or more, gas, oil or
mineral interests, water rights, or conservation easements.
Personal property
The like-kind rules for personal property are more restrictive
than real property rules. Qualifying property includes airplanes,
automobiles, billboards, boats, livestock, collectibles, computers,
copyrights, franchise licenses, furniture, machinery, musical
instruments, office equipment, oil and gas drilling equipment,
television licenses, and semi-tractors, to name a few. It is critical
for your success to obtain a qualified intermediary that is an
attentive and informed partner who will guide you through this
process.
