Can Real Estate be Exchanged for REIT Stock as Part of a “Section 1031 Like Kind Exchange?
Section 1031 of the Internal Revenue Code generally permits tax deferral when investment property or property used in a trade or business is exchanged for “like kind” property as long as the exchange is completed within 180 days of the transfer of the exchanged property. Non-simultaneous exchanges are also permissible under section 1031 if certain criteria are met. These exchanges are known as “like kind exchanges.” An example of a like kind exchange would be an exchange of an apartment buidling in Baltimore for an apartment building in San Diego. REIT stock does not qualify as investment property, and, accordingly, it is not possible to effect a like kind exchange of real estate for REIT stock. Although REIT stock cannot qualify for like kind exchange treatment, another provision of U.S. tax law (Section 721 of the Internal Revenue Code) does permit owners of real property to exchange their property for partnership interests on a tax-deferred basis if certain conditions are met. Relyi
