FAQs Questions about 1031 Exchange
Question: What are some of the more common types of contractual transfers of real estate that are not exempted from transfer tax?
Answer:
Property transferred as part of a like-kind exchange under Sec.1031 of the IRC or as part of a land swap are subject to transfer tax based on the fair market value of the property. Transfer tax is payable on each property transferred.
Question: Can transfers of real estate between a business entity and its owner be considered a gift?
Answer:No. Such transfers are not gifts because the owner receives consideration in exchange. The consideration comes either in the form of additional shares (or other indications of ownership interests) in the business entity and the business will have additional assets as a result of the transfer, or in the form of the enhanced value of the owner’s shares (or other ownership interests) as a result of the transfer. Any transfer of real estate between a business and it’s owners is taxable based on the fair market value of the assets transferred.
Question: Can transfers of real estate between a business entity and its owner be considered a gift?
Answer:No. Such transfers are not gifts because the owner receives consideration in exchange. The consideration comes either in the form of additional shares (or other indications of ownership interests) in the business entity and the business will have additional assets as a result of the transfer, or in the form of the enhanced value of the owner’s shares (or other ownership interests) as a result of the transfer. Any transfer of real estate between a business and it’s owners is taxable based on the fair market value of the assets transferred.
| Did You Know ? |
1031 Exchanges include many different types of real estate.
1031 Exchanges don't just apply to homes. 1031 exchanges can also include commercial and rental real estate, as well as vacant land.
|
Need to get more information about
Treasury Regulations
& 1031 issues? Then click here to contact us.
