An exchange involves an individual who desires to sell property and replace it with "like kind" property. Larson Abstract Company works with Central Exchange Company to handle your exchange requirements and process.
The like kind provision for Real Property is quite broad, and includes land, rental, and business property. Any of which, can be exchanged for the other. The like kind provision for Personal property is more restrictive.
1031 exchange allows investors to reinvest their capital in the most advantageous like-kind investment while deferring the capital gains, depreciation recapture and state income tax consequences.
It provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment ("relinquished property") if the property is exchanged solely for property of like kind that is to be held wither for productive use in a trade or business or for investment ("replacement property").
The type of property must be in productive use in a business (depreciable property), and can only be exchanged for the same type of property.