Like-Kind Property Requirements Flashcards

A taxpayer relinquishes a duplex held for rental income and wishes to acquire a single-family home as a rental. Is this a valid like-kind exchange?

Answer: Yes, because both are real property held for investment

Both a duplex and a single-family rental home are real property held for investment, making them like-kind.

Which of the following would disqualify a property from a 1031 exchange because it is 'held primarily for sale'?

Answer: A house flipped by a dealer after 90 days

Property held primarily for sale, such as dealer property that is quickly flipped, does not qualify for 1031 exchange treatment.

Can a taxpayer exchange one property for multiple replacement properties in a 1031 exchange?

Answer: Yes, as long as identification rules are followed

A taxpayer may acquire multiple replacement properties as long as the identification and acquisition rules under IRC 1031 are properly followed.

What is the primary distinguishing factor between investment property and dealer property for 1031 exchange purposes?

Answer: The intent of the taxpayer at the time of purchase and sale

The taxpayer's intent — whether the property is held for investment or for sale — is the primary factor distinguishing qualifying from disqualifying property.

Which of the following would be considered like-kind to an office building in a 1031 exchange?

Answer: A hotel property held for investment

A hotel held for investment is real property and is like-kind to an office building, regardless of use.

When does the IRS look at whether property was 'held for productive use in trade or business or for investment'?

Answer: At both the time of relinquishment and at the time of acquisition of the replacement property

Both the relinquished and replacement properties must be held for qualifying purposes at the time of each respective transfer.