Common 1031 Exchange Misconceptions
There are many potential benefits of doing a Section 1031 exchange, these benefits, however, are sometimes clouded by the common misconceptions pertaining to 1031 exchanges. These misconceptions may have prevented potential Exchangors from entering into a 1031 exchange.
Misconception 1: Both properties must be the same.
Therefore, an individual who owns a duplex may do a 1031 exchange and purchase an office complex or vice versa. “Non like-kind” property, such as, stocks, bonds, notes, or an interest in a partnership, does not qualify for a 1031 exchange. If individuals planned to sell their duplex or office building and buy stocks with the proceeds from that sale, they would not be eligible for the 1031 exchange.
Misconception 2: The properties must be in the same state.
Misconception 3: Time limitations may be extended.
Misconception 4: The taxpayer’s attorney or accountant can be used to facilitate the 1031 exchange.
Misconception 5: You cannot do a partial 1031 exchange.
Misconception 6: An Exchangor cannot refinance exchange property.
Misconception 7: Entities cannot do 1031 Exchanges.
Misconception 8: Partners in a Partnership can do a 1031 exchange.
Misconception 9: 1031 Exchanges only work for big investors.
Misconception 10: 1031 Exchanges are very complicated.
Common 1031 exchange misconceptions – Capital 1031 Exchange Company