Moving Forward With 1031 Land Exchange
1031 land exchange procedures as understood by section 1031 of the IRS book are rising steadily. This is because the people want to change where they are living and the lifestyle that they live. Many of the farmers are looking to get off the dairy farm and into the city, while many of the city folk are looking to move onto profitable farms, being close to nature. This movement leads to a high level of 1031land exchange programs. Those farmers who wish to remain on the countryside may wish to trade locations based upon the types of animals they raise, or the type of produce that is developed.
1031 land exchange is discussed along with the other types of like-kind properties that can be exchanged for other property to avoid the immediate taxation of that property. The 1031 land exchange laws states that the exchange must be of like-kind with no profits or losses being recognized by the government. This also states that there are strict time limits to the exchanges. In this 1031 land exchange, the property does not have to be the same, but the replacement property must of equal or greater value than the relinquished property.
As the Neo-hippy comes to age, the desire to go back to the farm grows with them. This often leads many of the youth from the cities to attempt farm life and communal living. This is where the exchange comes in. If one or more of these Neo-hippies own land, they can exchange the more expensive city property with very nice farm land. In tenets-in-common, many of these Neo-hippies can sell their properties and purchase a farm as a unit, qualifying for the 1031 land exchange tax breaks and deferments. This can come in very handy as much of America's farm land is becoming very expensive to purchase.
This process can be reversed as well. A farmer may sell land and property to purchase property in the city. This is to say that a failing farm can be sold and if city land is purchased within the allotted time, which then can cause a 1031 land exchange, allowing the farmer to sell the initial land with deferred taxes and use the whole amount to purchase the city land.
The process of purchasing and selling land does not have to include the same owners for everything. For example, the Neo-hippies sell their homes individually, to various owners, but invest this money with a qualified intermediate into a farm, qualifying for the 1031 land exchange. The farmer had the land for sale because he wished to purchase more land further south, away from the snow. Because the farmer is using a 1031 land exchange, he is able to invest the total of the sale from his farm into his new residence. The farmer who sold his farm in the south can then purchase a home in the city, completing the circle. This is not always the case, but it is a fine illustration as to how the 1031 land exchange can take place.
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