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 âact of Godâ (such as a casualty), or the government taking a taxpayerâs 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 1033 | Section 1031 | |
| Tax-Deferral purpose: | Involuntary conversion | Property held for investment or used in a business |
| Event: | Theft, damage or government taking for public use | Sale of property by owner |
| Is QI needed? | No | Yes |
| Can taxpayer receive funds? | Yes | No |
| Property: | Property similar or related in service or use | Like-kind property |
| Reinvest requirement for full deferral: | Reinvest same or greater sales price | Reinvest 1) net equity; 2) same or greater debt |
| Time deadlines: | 2 or 3 years, depending on circumstances | 45/180 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 Todayâs 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.
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.
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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