This usually implies a minimum of two years’ ownership. To receive the full benefit of a 1031 exchange, your replacement property should be of equal or greater value. You must identify a replacement property for the assets sold within 45 days and then conclude the exchange within 180 days.

Can you sell a 1031 exchange property to a family member?

Related party 1031 Exchange transactions occur when you sell your relinquished property to a related party or you buy your like-kind replacement property from a related party. Related party 1031 Exchanges are permitted provided you follow specific rules and guidelines issued by the Internal Revenue Service.

What do you need to know about 1031 exchange?

In order to qualify for non-recognition of gain under an Internal Revenue Code Section 1031 exchange (also called a like-kind exchange), both the property that you give up (the relinquished property) and the property you acquire (the replacement property) must be property held for productive use in a trade or business or for investment.

Can you sell raw land for 1031 exchange?

In terms of what properties you can buy and sell, however, the code is very flexible. You can sell raw land and purchase an apartment complex using a 1031 exchange. You can swap multiple properties for one property of equal or greater cumulative value, or you can use the exchange to purchase replacement property interests (RPIs).

Can a 1031 exchange property be converted to a principal residence?

This is an area where each person’s facts and circumstances are different, so before you get too far down the path of converting a 1031 exchange property to a principal residence, spend some quality time with your tax advisor. Is a Tax-Deferred Exchange Right for You?

How long do you have to own a 1031 home before selling it?

Also, Section 121 has a special rule for 1031 property that states that you have to own the home for at least 5 years (either as 1031 property or principal residence) before you sell it.