A 1031 exchange allows commercial property owners to defer federal and state capital gains and recaptured depreciation triggered on the sale of their holdings given real property of equal or greater value is acquired within 180 calendar days of sale.
Commercial properties will have an improved structure to be depreciated and typically land. Both may appreciate in value, such that at time of sale will trigger a gain. Both the recaptured depreciation and gain result in a tax that can be deferred in a 1031 commercial property exchange.
As with all 1031 exchanges, consideration must be given to the nature and character of conveyed rights of the 1031 exchange properties to determine whether they are essentially alike. This includes the likeness of physical properties, character of title conveyed, rights of the parties and period or duration of interests.
Commercial Properties Eligible for 1031 Exchanges
- Convenience stores and gas stations;
- Golf courses and practice ranges;
- Hotels and motels;
- Nursing homes;
- Office Buildings;
- Parking garages and lots;
- Self storage units;
- Shopping centers and strip malls;
When considering selling any of the above, include early in the evaluation cycle a consultation with a Certified Exchange Specialist®.
The use of a Certified Exchange Specialist® is an important step towards a successful 1031 commercial exchange. The designation affirms the experience level and expertise to accommodate the exchange. The Certified Exchange Specialist on staff at Atlas 1031 Exchange has been accommodating exchanges for professional advisers and their clients since 2003.