form 1031

Forum|Forum|2 years ago
June 28, 2023
3 replies
6 views

Hi If I sell one property in one county and buy another property in other county but in the same state (such as California) does it qualify the 1031 kind-like rule, thanks

Ask the Experts - Energy - June 2023

MirthaG

Employee Tax Expert

1031 Exchanges are also called like kind exchanges. It has to do with the properties having similar use. Being like kind. The county or State does not matter.

GuodaL

Level 4

Hi jimk719,

That is a good question.

The answer is yes, it is possible to trade into property located in another state. Under Internal Revenue Code Section 1031, real estate located in one U.S. state is like kind to real estate located in any other state, and you can even trade from one state to another. For more details, you can check out this article:

https://www.irs.gov/instructions/i8824

Hope this answers your question. Please feel free to respond if you have any follow up questions.

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jimk719Author

Level 2

Hi a follow up question about the property for 1031, if one is a rental property and the other property in another county is a single-family house, so 1031 rule still apples? thank you

MirthaG

Employee Tax Expert

Thank you. There are several rules to qualfiy for 1031 exchange, but with respect to the type of property, it must be investment property. You can replace a rental property with a house, but the house has to be investment property. The replacement property would not qualify if it was purchased as your residence or your vacation home.

MelanieC1

Employee Tax Expert

Hi @jimk719 !

Thank you for joining us today!

Yes! You can sell and then purchase a like kind property in another county. The location of the property does not disqualify it from being a 1031 exchange. Keep in mind that 1031 exchanges can be complex in other ways. There are strict rules regarding timing and the types of assets that qualify. Using a qualified 1031 intermediary and a tax professional can help ensure that the transaction is performed in compliance with the IRS rules and you have an appropriate tax deferral strategy.

Thank you!