Like-Kind Exchanges

1031 Property Exchanges

Our lawyers at our Massachusetts law firm advise people on the process for conducting a like-kind exchange of real property. Also known as 1031 exchanges, these transactions have many tax benefits, but need to be undertaken carefully to realize those benefits under Internal Revenue Service rulings. At Taylor, Ganson & Perrin, LLP, we have advised many clients on the advantage of 1031 exchanges. We have also warned them about the pitfalls of these complex real estate transactions. To learn more about an attorney's role in a 1031 exchange, contact us at our Boston law firm.

A like-kind property exchange can have significant tax benefits in the right circumstances.

The short definition of a 1031 exchange is exchanging one property for another without triggering a capital gains tax liability. There are many restrictions on how such a transaction can be completed. We walk clients through the process, helping them realize the benefits of a like-kind exchange. Some of the issues that arise in 1031 exchanges include:

• Limits on the time allowed for completing the transactions, usually six months
• How a 1031 exchange can be used in settling an estate
• Avoiding capital gains tax in a property exchange
• Limits on who can hold the funds realized by the sale of the first property; usually the proceeds can be held only by a qualified intermediary who is in no position to benefit from the exchange
• The need to document the intent to use the transaction in a 1031 exchange
• The IRS requirement to report the transaction on the individuals tax return
• Finding a second property to complete the transaction

Our attorneys advise clients on this type of real estate transaction. We also act as qualified intermediaries when appropriate. Finally, we use our knowledge of tax law to determine whether a like-kind exchange is right for our clients. Most people find the idea of a tax deferred exchange or other real estate transactions that reduce tax liability very attractive, but a 1031 exchange is not for everyone. Contact our real estate lawyers at Taylor, Ganson & Perrin, LLP, to learn more.