Airplanes, helicopters, and other aircraft are just a few of many items of personal property that most people don’t realize can be exchanged in a 1031 transaction. Call our 1031 exchange professionals today to talk about your options for exchanging aircraft under section 1031 – 612.643.1031.
1031 Exchanges of Airplanes & Aircraft
So why should you consider exchanging your aircraft? Selling a large ticket item like an airplane typically results in a big payout, so why not just take the money? It’s true that selling valuable property like aircraft will result in big gains. But remember, if take the money you have to recognize and pay capital gains taxes. The bigger the payout, the more taxes you owe. A 1031 exchange allows you to defer these capital gains taxes so long as you continue your investment into bigger like-kind property. The benefit is that you avoid a big tax hit and keep that money working for you over time in a new investment.
Airplane Exchange Requirements
There are several rules and requirements that need to be met in order complete a successful like-kind exchange of aircraft. First and foremost, your aircraft needs to have been used primarily for trade or business purposes. This is a general rule for all 1031 exchanges. Additionally, the aircraft you are selling and the aircraft you are purchasing need to be like-kind to one another. When it comes to real estate exchanges, the like-kind definition is very broad. With personal property, such as aircraft, the definition is much narrower. For example, a helicopter is like-kind to another helicopter, but not to a 747. Finally, remember that you need to go up in your value, equity, and debt when you exchange into your replacement property. If you meet all these requirements and you abide by the 45 day / 180 day exchange deadlines, then you will have a successful exchange!
St. Cloud Like-Kind Exchange Company
With any like-kind exchange, the taxpayer has a lot on their plate. Missing a deadline or failing to satisfy one of the 1031 requirements will result in a failed 1031 exchange, which is a situation no one wants to find themselves in. That’s where a qualified intermediary can step in, prepare the required documents, advise the taxpayer, and facilitate the exchange to completion. If you are considering a 1031 airplane exchange, contact our St. Cloud qualified intermediaries today to get started – 612.643.1031.