Like-kind Exchange - Like-Kind Exchange: Key Considerations

Like-Kind Exchange: Key Considerations

Several requirements must be met in a like-kind exchange to ensure that tax liability is not created upon the sale of the first asset:

(1) The property or asset being sold (“old property”) must be held for investment or use in a trade or business, and cannot be a personal residence. (2) The property or asset being purchased with the proceeds (“new property”) must be "like-kind" to the old property. (3) The proceeds from the sale must be used to purchase the new property within 180 days of the sale of old property, although the new property must be identified within 45 days of the sale. (4) The investor cannot be in "constructive receipt" of the money from the sale of the old property.