DGAA bLAWg

IRS Code Section 1031 Exchanges

Web Admin - Wednesday, December 23, 2015

IRS Code Section 1031 exchanges, Illinois real estate attorneyUsually, when an individual sells an investment property and enjoys a gain on the sale, that gain is taxed. However, it may be possible to postpone having to pay that tax under certain conditions. This is because of a special provision of the Internal Revenue Code (IRC) related to “like-kind” exchanges of property. 

Like-Kind Exchanges

Under IRC §1031, an exception to the tax on the sale of an investment property is made for transactions that involve a like-kind exchange. This type of transaction occurs when the property being sold and the property being acquired meet certain requirements. First, both properties must be held for investment purposes. This means that property held for personal use does not qualify as a like-kind exchange. 

The second requirement is that the sold property and the acquired property must be sufficiently similar to each other. Property that is like-kind must have the same nature, character, or class. Generally speaking, real estate is like-kind to other real estate. But, property within the United States is not like-kind to property outside of the United States. Both real and personal property can be like-kind, but they are not like-kind to each other. 

Some types of property specifically excluded from §1031 include, but are not limited to: 

1. Property held primarily for sale;

2. Stocks, bonds or notes;

3. Partnership interests; and

4. Certificates of trust. 

§1031 allows an individual to delay the payment of tax on a gain from the sale of property so long as the proceeds are reinvested in similar property. It is important to note that this allows for the payment of tax to be deferred. It does not mean that the individual will never have to pay tax on the gain. 

Reporting to the IRS 

When an individual completes a like-kind exchange, it must be reported to the Internal Revenue Service (IRS). To do this, the individual must fill out Form 8824 and file it along with his or her tax return for the year in which the exchange occurred. Form 8824 requires the individual to provide the following information: 

1. A description of the properties involved;

2. Date the properties were exchanged;

3. Whether a relationship exists between the parties involved in the exchange;

4. Value of both properties;Gain or loss on non-like-kind property involved;

5. Cash accepted or paid;

6. liabilities relieved or taken on; and

7. The adjusted basis of the property relinquished and any realized gain. It is important to follow the reporting requirements, as failing to do so can lead to the assessment of tax, penalties, or interest on the transaction. 

Help with Real Estate Issues 

Often, the sale of investment property leads to a significant tax event. By utilizing this special provision of the tax code, you can delay having to pay that tax. For more information related to the tax implications of buying and selling investment property, contact a skilled Illinois real estate attorney today. Our firm provides help to individuals in the communities of Inverness, Palatine, Schaumburg, Arlington Heights, Long Grove, Kenilworth, Riverwoods, Barrington, South Barrington, and Mount Prospect.

About the Author: Founding partner of Drost, Gilbert, Andrew & Apicella, LLC, Colin Gilbert, received his J.D. from Chicago-Kent College of law in 2005. Colin argues cases across many practice areas including criminal defense, collections, civil litigation, real estate law, and corporate law. Colin is an active member of the Board of Governors of the Northwest Suburban Bar Association and the Illinois Creditors Bar Association. He is currently Vice President of the Arlington Heights Chamber of Commerce, and is a Commissioner for the Village of Arlington Heights. Colin has a 10.0 Attorney rating on Avvo, and was named one of the 2014 “Top 40 Under 40” Trial Lawyers in Illinois by the National Trial Lawyers Association.



Source:
https://www.law.cornell.edu/uscode/text/26/1031

Recent Posts


Tags

Colin Gilbert Illinois insurance lawyer trucking accident lawyers Barrington estate planning attorney pedestrian-automobile accident Palatine business attorney Illinois employee rights attorney. comp time underfunded trust healthcare insurance adjusters accidental death benefits Illinois insurance claims lawyers Crystal Lake employment lawyer Rolling Meadows employment attorney Illinois insurance claim dispute lawyer Rolling Meadows Attorney Palatine corporate attorney Rolling Meadows traffic attorney Des Plaines personal injury attorney Barrington personal injury lawyer wills and trusts Arlington Heights traffic attorney Deer Park criminal attorney truck collisions traffic crimes real estate contract Illinois employment attorneys Chicago insurance law firm insurance claim denial Palatine elder law attorney Palatine probate lawyer Illinois construction accident attorney Buffalo Grove car accident lawyer dealing with problem employees workers comp compensatory time Schaumburg car accident attorney medical malpractice claims insurance denial appeals crossover accidents Palatine personal injury lawyer trust payments boating accidents Palatine construction attorney rumble strips Chicago car accident lawyer Barrington drug crime attorney wrongful termination denied insurance claim Arlington Heights wills and trusts attorneys bad faith insurance claims digital assets Barrington injury attorney whistleblower protections Illinois pedestrian accident attorney estate planning attorney Kenilworth estate planning lawyer material misrepresentation low-ball insurance settlement Buffalo Grove personal injury attorney real estate lawyer insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys drug crimes estate tax Illinois workplace lawyer Arlington Heights personal injury lawyer digital information employment attorney Barrington medical malpractice lawyers corporate law forming a corporation in Illinois DNR Long Grove estate planning attorneys Illinois trusts attorney Rolling Meadows car accident lawyers Buffalo Grove law firm Schaumburg life insurance attorney Rolling Meadows insurance lawyer denial of insurance claim employee misclassification contracts overtime violations bicycle dooring accidents landlord Illinois medical malpractice attorney Arlington Heights accident attorney Des Plaines drug crimes lawyer Illinois Transfer on Death Instrument Inverness elder law lawyer foreclosed rental property Schaumburg real estate lawyer Rolling Meadows real estate attorney Illinois pet lawyer Illinois Workers’ Compensation Commission Rolling Meadows marijuana attorney Arlington Heights wills and trusts lawyers Inverness real estate attorney insurance agent negligence speeding BAC South Barrington real estate lawyer Schaumburg criminal law attorney Jay Andrew Arlington Heights pedestrian accidents hit and run accident insurance attorney Illinois home inspection workplace sexual harassment Schaumburg estate planning lawyer distracted driving accidents life insurance claim denial, denial of life insurance claim Affordable Care Act Crystal Lake medical malpractice law firm Inverness accident lawyer Rolling Meadows drug defense attorney tax attorney denied insurance claims Illinois insurance disputes pedestrian accident Palatine estate planning lawyer senior citizens Illinois business lawyer Arlington Heights trucking lawyer Arlington Heights wills and trusts lawyer golf accidents Arlington Heights car accident lawyer Crystal Lake car accident attorney probate claims PTSD Rolling Meadows criminal lawyer Des Plaines DUI attorney medical malpractice compensation problem employees IRELA personal injury claim DUI defense rest breaks Palatine law firm probate lawyer appealing an insurance claim criminal defense Deer Park employment law attorney drugs Arlington Heights real estate lawyer Barrington civil litigation attorney Illinois workers compensation lawyer Illinois Human Rights Act Schaumburg federal crimes hands free device college kids job lawyers Des Plaines real estate lawyer Deer Park real estate law firm slip and fall accidents murder charges income distribution deducation drug crime pain and suffering Rolling Meadows boating crash lawyer Arlington Heights car crash attorneys Palatine injury attorney Arlington Heights tax lawyer unpaid assessment Palatine civil litigation lawyer Barrington criminal defense lawyer IRS Chicago corporate attorney Exclusions special needs trust trauma after an accident taxes Illinois traffic ticket lawyer Mt Prospect Attorney Des Plaines accident attorney Long Grove estate planning subcontractor Des Plaines collections attorney real estate attorneys Barrington workers compensation attorney expungement personal injury law firm Chicago trucking accident attorney guardianship attorney hiring employees marijuana crimes attorney personal injury lawyer Long Grove real estate lawyer Chicago estate planning Palatine criminal defense lawyer clemency Illinois insurance claim dispute lawyers elder law disability benefits Illinois mortgages Illinois employment law attorneys wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace Des Plaines real estate attorney Illinois employment laws Crystal Lake will lawyer Deer Park medical malpractice attorney creditors holiday statistics living trust vs will traumatic brain injury Palatine insurance lawyer Illinois wills and trusts attorneys Do Not Resuscitate breathalyzer test how to avoid common denials of life insurance claims construction accidents Des Plaines drug lawyer DUI attorney natural gas explosion Schaumburg estate attorney vacation home fines operating agreements employment contract Inverness estate planning lawyer Illinois traffic accident lawyer probate Illinois Sales Representative Act Colin H. Gilbert Illinois motorcycle accident lawyer DGAA insurance negligence Employment Discrimination Law child safety changes to mortgage law Crystal Lake pet attorney liability claims Deer Park traffic accident attorney home inspection lawyer license suspension Des Plaines motorcycle accident attorney Chicago life insurance attorney defective products lawyer IRA benefits Barrington boating accident attorney living trust BUI Illinois injury lawyer POA privacy Rolling Meadows accident lawyer Illinois Smoke Detector Act Crystal Lake car accident lawyer car crash denial of life insurance severance agreements Arlington Heights injury attorney deed transfer insurance disputes Crystal Lake traffic attorney Barrington criminal lawyer Barrington attorney sexual harassment minimum wage probate claims process Buffalo Grove injury lawyer healthcare claims social media after death Illinois insurance dispute lawyers loopholes unauthorized overtime DMV employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys license reinstatement car accident lawyer preventable medical errors rollover car crashes Palatine civil attorney controlled substance unpaid overtime Schaumburg personal injury lawyers Illinois criminal defense attorney drunk driving statistics Schaumburg construction accident lawyer criminal record Illinois traffic laws FMLA slip and fall Chicago will attorney, social media platforms, Illinois estate planning lawyer, FSLA Barrington Traffic Lawyer Arlington Heights Attorney Arlington Heights TBI attorney IRA trust transfer Schaumburg drug defense lawyer Fourth of July Inverness probate lawyer Illinois medical malpractice lawyers Des Plaines civil attorney boating DUI Barrington business law firm construction contracts Schaumburg estate planning attorney GM ignition switches dynasty trusts School Visitation Rights Act Whistleblower Claims small business probate process financial advisors criminal life insurance claims underage DUI Des Plaines injury law firm insufficient documentation Des Plaines personal injury lawyer rent to own real estate contracts license Rolling Meadows Buffalo Grove corporate attorney Rolling Meadows life insurance claim denial attorney consent to a search internet traffic deaths commercial leasing pizza emoji Rolling Meadows traffic law firm Illinois living will texting and driving civil litigation attorney medical research Crystal Lake employment law attorney back injuries Illinois car accident attorney meal breaks Family Medical Leave Act civil rights violation Chicago will attorney filing a medical malpractice claim Long Grove estate planning attorney startup company Rolling Meadows insurance dispute lawyers Illinois estate planning attorney Illinois trucking safety Des Plaines personal injury lawyers Chicago biking tips Forcible Entry Chicago employment lawyer Palatine punch death life insurance policy traumatic brain injuries cell phone accidents health insurance dispute Crystal lake insurance dispute attorney spinal cord injury Palatine corporate law attorneys car accident lawyers estate planning lawyer business litigation Inverness insurance attorney Rolling Meadows tax attorney Illinois real estate Buffalo Grove criminal defense lawyer products liability Illinois medical malpractice claim dram shop law rollover accidents condo association Inverness civil lawyer no contest clauses pay when paid contract Kenilworth estate planning attorneys insurance claim delay elder abuse pet law condo Schaumburg probate attorney Illinois elder law attorney insurance denials ObamaCare Crystal Lake medical malpractice lawyer Fair Labor Standards Act Palatine traffic lawyer Arlington Heights criminal lawyer Illinois DUI attorney Illinois driving without license pet bites sole proprietorship Illinois civil litigation lawyer Inverness traffic law firm surgical mistakes traffic laws criminal law Crystal Lake personal injury lawyer Barrington real estate lawyer Illinois bicycle safety estate planning for college students Liquor Control Act employees employment law, Illinois employment laws trusts Deer Park personal injury lawyer wills most common reasons for life insurance claim denials power of attorney Buffalo Grove life insurance attorney uninsured motorist swimming pools Thanksgiving cell phone tower data Schaumburg personal injury attorney ACA Palatine drug lawyer Rolling Meadows personal injury lawyers coronavirus Schaumburg elder law lawyer Crystal Lake estate planning lawyer capital gains tax Illinois personal injury attorney Inverness DUI lawyer Schaumburg employment law attorneys texting while driving Deer Park accident attorney Illinois job attorney fiduciary rule delay ken apicella real estate closing Illinois law Illinois wrongful termination lawyer personal injury attorney breach of contract Buffalo Grove employment lawyer traffic tickets Illinois small business Mount Prospect real estate lawyer real estate attorney blood alcohol content nursing home negligence field sobriety test spinal cord injuries workers compensation benefits paid sick leave Illinois insurance attorney liability Barrington life insurance lawyer commercial real estate Illinois workers compensation attorney medical marijuana employee rights probate fees cause-of-death exclusions Arlington Heights lawyer Illinois boating accident lawyer car collision estate plan Crystal Lake law firm Des Plaines tax law firm Buffalo Grove traffic lawyers blended families lapse in policy Home Remodeling Repair Act Rolling Meadows litigation lawyer reckless homicide Schaumburg wrongful death attorney murder defense insurance agents DUI Illinois red light cameras pregnant women Mount Prospect elder law attorney Buffalo Grove personal injury lawyer Illinois employment lawyer Illinois workplace discrimination attorney foreclosure Rolling Meadows Traffic Lawyer unfunded trust murder loss of consortium Illinois probate lawyer icy parking lots Illinois LLC creation independent contractor traffic accidents privacy laws Food and Drug Administration's Food Safety Modernization Act distracted driving accident victims Rolling Meadows probate lawyer real estate leasing Illinois Probate Act of 1975 bicycle accidents Crystal Lake civil litigation lawyer Joliet general practice lawyers Buffalo Grove medical malpractice lawyers mass shooting Palatine life insurance lawyer fault based insurance Rolling Meadows employment law attorney Buffalo Grove insurance claim dispute lawyers fiduciary rule estate planning Inverness real estate lawyer Arlington Heights personal injury attorney Chicago insurance claim attorneys Illinois traffic attorney product liability Des Plaines pet law attorney Illinois Wage Payment and Collection Act license revocation eluding a police officer Illinois corporate lawyer living wills Rolling Meadows business lawyer estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, Illinois lawyer Crystal Lake medical malpractice attorneys employment lawyer mortgage Rolling Meadows corporate lawyer landlord tenant law Palatine employment attorney comparative negligence insurance claims Rolling Meadows insurance attorney Schaumburg traffic lawyer Arlington Heights employment attorney preventing accidents employee discrimination installment contracts involuntary manslaughter Rolling Meadows medical malpractice lawyers motorcycle accident lawyer DUI penalities Deer Park traffic lawyer digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers llinois Real Estate Lawyers Association life insurance Inverness corporate attorney Inverness injury lawyer personal injury cell phone Crystal Lake employment attorney gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys Palatine workers compensation lawyer Chicago attorney workers compensation power of attorney for healthcare Illinois personal injury lawyers traffic offenses Chicago employment attorney Crystal Lake accident attorney Palatine Attorney Schaumburg injury lawyer Palatine trusts lawyer Crystal Lake pedestrian accident lawyer fatal car accidents Illinois personal injury Des Plaines criminal attorney Schaumburg medical malpractice lawyer residential real estate bike accident car crash injuries Barrington employment law firm Riverwoods estate planning lawyer Self-Directed IRA Accounts Chicago lawyer Rolling Meadows DUI lawyer BAIID Rolling Meadows insurance dispute lawyers, insurance dispute insurance dispute Transfer on Death Instrument deadly crashes Barrington employment attorney natural gas LLCs work unions car accidents Crystal Lake business law attorneys Barrington litigation attorney Policy Cancellation premises liability Federal Food Drug and Cosmetic Act overtime pay Barrington Illinois estate planning lawyer life insurance lawyer trench injuries vacation home insurance claim dispute attorney insurance claim denials revenge porn Illinois employment law Illinois estate planning Crystal Lake bike accident lawyer caretaker rights Crystal Lake injury attorney drunk driving Arlington Heights estate planning attorney car crashes Schaumburg Attorney Illinois personal injury lawyer wage theft Illinois speeding lawyer Des Plaines car accident Des Plaines Traffic Lawyer federal regulations for LLCs new real estate form construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys Arlington Heights Traffic Lawyer Crystal Lake criminal defense attorney agent Illinois tax attorney Kenilworth estate planning attorney Deer Park motorcycle accident lawyer personal injury claims Schaumburg civil litigation attorney Crystal Lake personal injury attorney estate planning trusts underinsured motorist Palatine traffic accidents pedestrian injuries, pedestrian fatality Schaumburg insurance lawyers manufacturing Chicago traffic lawyer Barrington employment law attorney medical malpractice traffic violations defense real estate zoning Super Mario Illinois defective products attorney institutional trustee Home Sale Contingencies Illinois estate planning law firm caregiver jet ski accidents insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys Illinois employment law Des Plaines insurance attorney South Barrington real estate attorney CAM insurance claim dispute trustee marijuana Inverness personal injury attorney medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers liens Barrington estate planning lawyer Illinois jet ski accident lawyer Buffalo Grove real estate attorney Illinois medical malpractice case Arlington Heights medical malpractice lawyer real estate gift taxes irrevocable trust Retaliatory Discharge Illinois collections attorney Illinois attorney Crystal Lake traffic lawyer Deer Park workers compensation lawyer right to work digital evidence Des Plaines medical malpractice attorney TBI drug crimes lawyer auto accidents brain injury medication errors Long Grove real estate attorney drug possession Palatine real estate lawyer civil litigation Landlord Tenant Ordinance Long Grove wills and trusts attorneys estate attorney trucking accidents Rolling Meadows personal injury lawyer top life insurance claim denials Schaumburg employment attorney Illinois registered agent Chicago estate planning lawyer Illinois employment law firm dog bites Arlington Heights wills and trusts attorney advance healthcare directive living trust benefits automated cars Schaumburg corporate attorney first degree murder Arlington Heights insurance attorney Buffalo Grove traffic attorney in terrorem provision estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers Illinois wills and trusts traffic violations digital media accounts, estate planning, Arlington Heights estate planning attorney, Buffalo Grove probate lawyer modern family estate planning Schaumburg personal injury lawyer commercial leases Arlington Heights employment law attorneys Schaumburg criminal attorney driving Legal Info insurance dispute attorney Illinois traffic attorneys Rolling Meadows employment law attorneys owner responsibility Palatine employment law lawyer Detainer Actions Illinois Trust Code homestead rights Crystal Lake insurance lawyer Barrington personal injury attorney Illinois employment law attorney Rolling Meadows personal injury attorney sexual images beneficiary complications Mount Prospect wills and trusts lawyers Rolling Meadows estate planning attorney motorcycle accident attorney fees personal injury accidents Palatine employment lawyer Deer Park DUI lawyer Rolling Meadows criminal attorney Illinois real estate lawyer suspended license Illinois insurance claim attorney food poisoning Illinois will lawyer wrongful death boating under the influence anesthesia errors Class A misdemeanor head on collisions pedestrian accidents Illinois rollover accident lawyers Attorney Ken Apicella defective products Illinois business law atorneys Crystal Lake tax lawyer jet ski investment property insurance claim Des Plaines claims law firm

Archive