Section 1031 versus Section 1033

There are many tax code provisions that provide tax benefits for different situations.

Section 1031 exchanges allow a taxpayer selling property held for investment or used in their business to defer paying taxes when exchanging for like-kind replacement property and following the time deadlines and other requirements of the tax code and Treasury Regulations.

Section 1033 provides tax relief in situations involving involuntary conversions. Events that result in an involuntary conversion include theft, damage resulting from an “act of God” (such as a casualty), or the government taking a taxpayer’s property for public use. The essential elements of an involuntary conversion are a property loss caused by destruction (either complete or partial), theft, seizure or condemnation.

The chart below provides a comparison of these tax codes and some of the applicable requirements.

Section 1033Section 1031
Tax-Deferral purpose:Involuntary conversionProperty held for investment or used in a business
Event:Theft, damage or government taking for public useSale of property by owner
Is QI needed?NoYes
Can taxpayer receive funds?YesNo
Property:Property similar or related in service or useLike-kind property
Reinvest requirement for full deferral:Reinvest same or greater sales priceReinvest 1) net equity; 2) same or greater debt
Time deadlines:2 or 3 years, depending on circumstances45/180 calendar days

1031 Exchanges in the Commercial Market

Scott Saunders, SVP of Asset Preservation, presents an overview of 1031 exchanges for commercial real estate transactions. This recorded webinar discusses:

  • Reverse Exchange Formats and the Increase in Reverse Exchange Activity
  • Handling 1031 Exchanges of LLCs and Partnerships
  • The Rise of Delaware Statutory Trusts (DST) Investments in Today’s Market
  • Combing a Section 1031 exchange with a Section 721 UPREIT

Learn how this tax-deferred exchange can be used as a powerful tool for your commercial real estate investments.

1031 exchange office

1031 Exchange Webinar

Monday, August 19th

10:00 AM – 11:00 AM CT
CPE Available

This one-hour intermediate/advanced webinar covers critical time deadlines, like-kind requirements, fractional ownership, oil/gas/mineral rights, related party transactions, partnership/LLC scenarios, reverse and improvement exchanges, and how to avoid common pitfalls.


Friday, September 27th

12:00 PM – 2:00 PM CT
CE Available

This two-hour course for commercial brokers provides a concise and thorough overview of 1031 exchanges. This webinar tackles advanced issues such as partnership/LLC scenarios, creative property variations such as perpetual cellular easements (cell towers), fractional ownership, transferable development rights, reverse and improvement exchanges, how to avoid common pitfalls and related-party transactions.

webinar


Federally Declared Disaster Extension Information

Click the link below to determine if you may qualify for an extension.

https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Additional information here: https://apiexchange.com/disaster-relief/


We Love Our Happy Customers

“API provided a wealth of information leading up to my transaction and gave me the tools I needed to assess whether doing a 1031 was right for my situation. Once I was ready to do the exchange, they were detailed and meticulous through the entire process and answered any questions I had.
I highly recommend API!”
– Mary Loden

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Call Us

Asset Preservation would appreciate the opportunity to work with you
on your next 1031 exchange. Give us a call for a free consultation.