1031 Tax Exchanges Bozeman Montana

Whether Bozeman, Montana real estate or not, generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Service (IRS) Code Section 1031.

If, as part of the 1031 tax exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.

Note: Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.


Like-Kind Properties

Properties are of like-kind if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. However, farm and ranch livestock of different sexes are not like-kind properties. Also, personal property used predominantly in the United States and personal property used predominantly outside the United States are not like-kind properties.

Real Properties generally are of like-kind regardless of whether the properties are improved or unimproved. However, real property in the United States and real property outside the United States are not like-kind properties.

Benefits of Exchanging Versus Selling Property

Let’s assume a sale price of $250,000 with a real estate loan of $100,000, and the property was purchased for $150,000 a few years ago:

Selling Your Real Estate

Sale Profit $150,000
Tax Payable $28,000
Available Investment Cash $122,000
New Investment Purchasing Power (25% down) $488,000

1031 Real Estate Exchange

Sale Profit $150,000
Tax Payable NONE
Available Investment Cash $100,000
New Investment Purchasing Power (25% down) $600,000

More 1031 Exchange Resources

Montana Real Estate Reports

All information contained herein is derived from sources deemed reliable, however, is not guaranteed by Christie’s International Real Estate Company, Managing Broker, Agents or Sellers. Offering is subject to error, omissions, prior sales, price change or withdrawal without notice and approval of purchase by Seller. We urge independent verification of each and every item submitted, to the satisfaction of any prospective purchaser. 2015 – 2017 ©Copyright Taunya Fagan Montana Real Estate. All rights reserved. An independently owned and operated member of Christie’s International Real Estate. Equal Housing Opportunity.