Details you may probably not know about 1031 exchange

As an investor, you are not out of luck if you are looking for a new idea for your business. Generally, you would have to sell your office, pay the taxes in the profit you gained, and purchase a new one with the left money. But you have the possibility to use all the funds you get to purchase a new location, if you apply for the 1031 exchange. You should get in touch with a professional company that can explain you the delaware statutory trust advantages, because it is important as an investor to know all the methods you can use to improve the effectiveness of your business. You main question may be what type of property you can exchange if you use the 1031 exchange. Well you should know that you could change the equipment you use to gain money, the investment real estate you use for your business or a personal property that you expect to grow in value in the following period.

Utilizing a Real Estate Investment for Passive Income

What assets are deferred by the exchanged?

If you do not have expertise in this domain, you may not know which ones of your properties can be deferred by tax exchange. Below you will find a complete list that will prove very useful in the future.

  • Investment properties as commercial buildings held for sale, rental houses, apartments for rent, or other similar buildings
  • Timber, farmland, recreational space or lands that produce income
  • Vehicles you use to gain money as trucks, autos, boats or planes
  • Equipment as building cranes and tractors
  • Chattel as cattle or horses
  • Personal properties
  • Smaller items that can be used as investment, like collections of coins or other valuable items

You can change any of these items for another type of investment, and you do not have to find exactly the same product. For example, if you are the owner of building equipment, you can swap it for other equipment items you need. You have to prove that the assets you exchange your property for are purchased with the purpose to make money, and not to personally use them.

What items are not eligible for the 1031 exchange?

Even if the list of items that are eligible for the swap is long, you should keep in view that some of your personal properties cannot be exchanged.

  • You cannot swap ownership interest or shares of stocks in a partnership or company
  • Mutual funds, bonds, stocks or real estate trusts are not eligible for the swap
  • Personal use properties cannot be used in the swap, but here is an exception, because you have the possibility to exchange you vacation house if you use it for earning income
  • If you have purchased a real estate for reselling it, or to be flipped, or land for building this type of property, then you will not be able to make the exchange.
  • Check the regulations because some of the properties located in US territories do not qualify for the swap, and you have to be sure that yours is not included in this category.