1031 Exchange

[DaveO]

Taxpayer owns a hog confinement building and land which he rents out. He wants to do a 1031 exchange for farm land which he intends to farm. While both are real property held for income does the fact that the hog confinement qualifies as a single purpose Ag structure make the properties unlike?

[Burke]

Taxpayer owns a hog confinement building and land which he rents out. He wants to do a 1031 exchange for farm land which he intends to farm. While both are real property held for income does the fact that the hog confinement qualifies as a single purpose Ag structure make the properties unlike?

Basically, all real property is "like-kind" with all other real property. The exchanger must have held the relinquished property for investment or for productive use in their trade or business, and must intend to do the same with the replacement property. Interesting note here is that livestock for livestock must be of the same sex. I don't know if that will apply in your case, but it should otherwise qualify. (i.e, rental prop for bus prop). See a 1031 specialist in the BEGINNING to make sure it is handled properly. He cannot just sell one and buy the other.

[Roland Slugg]

Concur

For what it's worth, I concur with Burke's reply above, including the recommendation about contacting a §1031 intermediary before the sale of the old property or the purchase of the replacement property takes place.

If the hogs are part of the selling price, and they are not replaced with hogs of the same sex, that will, essentially, be treated as a separate sale. If this is the case, it would be very helpful to allocate a specific portion of the selling price to the hogs ... as well as to any other farm assets sold that aren't part of the real estate.