What is like a kind exchange?

A similar exchange is also known as the 1031 Exchange with reference to Section 1031 in the US Code for internal income. In essence, this is a way to temporarily circumvent capital profits by investing revenues from sale in a similar asset. Normally, it would be obliged to pay taxes of capital profits of which $ 200,000. However, if it bought new assets for $ 500,000 (or more), it would make a similar type of species and would therefore be exempt from capital profits until it received a new investment. For this reason, this is a good idea for the Peop to offer the original asset for sale, considers it a costly transaction. Within 45 days of the initial sale, the person must identify alternative assets and within 180 days of the initial sale, the transaction to the substitute property must be fully completed. Time limits are calculated on basic calendar days, without exceptions on weekends or holidays.

Most of the properties may be subject to a similar species exchange, but shares, bonds and partner interests may not be explicitly. In addition, most assets are open. Real estate in the United States is considered a species with all other real estate in the country, regardless of the type or location. For example, a piece of residential property in Louisiana is as kind to the Alaska factory.

In addition, the assets can be involved if it is like a class for other assets. IRS recognizes13 classes of assets. The private plane can be used, for example, in a similar replacement with a helicopter because both are part of the same transport class. Similarly, the steamer can be used with a ditch because both are part of the same class of construction machines. However, due to time restrictions, it is important that individuals contact a qualified mediator and identify a replacement property as soon as possible.