Personal property exchanges also allow you to defer your capital gains taxes and keep your money working for you, but they come with some additional restrictions and considerations that you need to take into account. Our St. Cloud 1031 exchange professionals are standing by to help you through your personal property exchange. Give us a call today to talk about your options and start your exchange – 612.643.1031.
Personal Property vs. Real Property Exchanges
The general concept behind exchanging personal property is the same as that of real estate. The taxpayer sells a piece of property, and then instead of recognizing the capital gains taxes on that sale, re-invests the net proceeds into replacement property. That being said, there are some significant differences in practice when it comes to personal property 1031 exchanges.
The biggest difference is the like-kind requirement. In any 1031 exchange you need to exchange into and out of property that is like-kind. In the realm of real property, most real estate is considered like-kind with most other real estate. You can exchange out of a storefront property in downtown St. Cloud and into a piece of farmland on the outskirts of town. The definition of like-kind in the realm of personal property is much narrower. Property has to be within the same general asset class in order to qualify for 1031. So if you’re exchanging out of livestock, you can purchase new replacement livestock that matches up under that particular asset class, but you cannot exchange that livestock for farming equipment.
1031 Exchange Personal Property in St. Cloud
Personal property exchanges are often trickier than real estate exchanges and many taxpayers end up with unsuccessful exchanges because they didn’t take the proper precautions. That’s where a qualified intermediary can help by making sure you’re informed about the intricacies of personal property exchanges and guiding you through the process. If you’re considering a 1031 exchange of personal property contact our St. Cloud qualified intermediaries today to get started – 612.643.1031.