Question 1

What types of properties qualify for a 1031 exchange*?

Accepted Answer

To qualify for a 1031 exchange, the properties involved must be considered "like-kind." This generally means that real estate must be exchanged for real estate, and personal property must be exchanged for personal property of the same nature or character. There is some flexibility within these categories. For example, an apartment building can be exchanged for a strip mall, or a piece of raw land can be exchanged for a rental property.

Question 2

Can I do a partial 1031 exchange*?

Accepted Answer

Yes, it is possible to do a partial 1031 exchange, where only a portion of the proceeds from the sale of the relinquished property is transferred in the replacement property. In this case, the seller would have to pay capital gains taxes on the portion of the proceeds that were not used for the new property purchase. The portion utilized through the 1031 exchange would still benefit from tax deferral.

Question 3

What is not allowed in a 1031 Exchange*?

Accepted Answer

According to IRS rules, certain transactions and property types are not allowed in a 1031 exchange. These include personal use properties like primary residences, stocks and bonds, dealer properties intended for sale, foreign real estate, personal property like furniture, and property acquired with immediate resale intent. Consulting a tax professional is recommended to understand eligibility and compliance requirements.

Question 4

How would the title be held under a fractioned ownership?

Accepted Answer

In most cases the tittle would be held as Tenant in Common (TIC).  TIC is a legal ownership structure where multiple investors may own an undivided interest in a real property asset.  Owners can hold unequal shares and they can sell their shares independently from other tenants.

10131 Exchange Into Co-Ownership

What is a 1031 Exchange?

Explore 1031 Eligible Properties

The Ascent

$143,000

The Palm

$325,000

$345,000

Lula Cove

$250,000

$280,000

Traditional 1031 vs. Fractional 1031

Traditional (Whole Home)

Co-Own with Fraxioned

How the Fraxioned 1031 Process Works

1

Sell Your Property

2

Identify New Property

3

Complete the Exchange

4

Enjoy Fractional Ownership

Why Use Fraxioned for 1031 Exchanges

The Lifestyle

Management

Rental Revenue

Streamlined

Frequently Asked Questions

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