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Which of the following types of real property will qualify as like-kind property?

a. property located outside the united states
b. real property used in a trade or business
c. personal use real property
d. real property held for investment

User Jarig
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1 Answer

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Final answer:

Like-kind property in a 1031 exchange refers to real estate held for business or investment that can be exchanged without immediate tax liability. Qualifying types include real property used in a trade or business and real property held for investment.

The correct option is d. real property held for investment.

Step-by-step explanation:

The question concerns the classification of like-kind property for the purpose of a 1031 exchange in the U.S. tax law. Like-kind property refers to two pieces of real estate that can be exchanged without the owner incurring a tax liability from the IRS. Real property, in this context, must be held for productive use in a business or for investment. Therefore, the correct option that qualifies as like-kind property is:

Real property used in a trade or business

Real property held for investment

However, personal use property and property located outside the United States do not qualify for like-kind exchanges. Investments such as a house, land, or even Japanese investors buying U.S. real estate represent the kind of property that can be exchanged provided they meet the criteria for being held for business or investment purposes.

User Krysta
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