1031 Exchange Guide

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1031 Exchange Requirements

A trade of Like-Kind property (held for business use or held for investment) must meet the following six conditions according to the IRS to be non-taxable:

1. The Relinquished Property and the Replacement Property must be business or investment property. No property designated for personal use can be traded in a Like-Kind Exchanges.

2. The property must not be held primarily for sale. This includes merchandise held for the purpose of selling to customers.

3. The property must not be stocks, bonds, notes, choses in action, certificates or trust or beneficial interest, or other securities or evidences of indebtedness or interest.

4. A trade of Like-Kind property must take place. Like-Kind property includes Property that falls under the same of 13 General Asset Class or the same Product Class (in the North American Industry Classification System [NAICS]).

5. The Replacement Property must be identified in writing within 45 days after the day that the Relinquished property is given up.

6. The Replacement Property must be received on or before:
180 days after the day that the Relinquished Property is given up; or
The due date, including extensions, for the tax return for the year in which the transfer of the Relinquished Property occurs.