Tax - 1031 Exchanges

  • Holland & Knight's tax attorneys have significant experience handling "like-kind exchange" or "1031 exchange" transactions.
  • These tax-free exchanges, under Section 1031 of the Internal Revenue Code, allow a property owner to transition from one real estate investment to another real estate investment of equal or greater value and to defer income taxes if certain requirements are met.
  • Our lawyers represent individuals, partnerships and corporations in Section 1031 exchanges in a variety of sectors (including all types of real estate, oil and gas, and timber).
1031 Exchanges with arrows

Visión General

Holland & Knight's tax attorneys have substantial experience representing individuals, partnerships and corporations in a wide range of "like-kind exchange" or "1031 exchange" transactions. A 1031 exchange allows a taxpayer to exchange one real property investment for another real property investment in a tax-deferred manner. For this purpose, real property includes land, buildings (whether residential, commercial, industrial, office, etc.), other inherently permanent structures, timber, and various oil and gas investments (such as working interests, leases, royalties, overriding royalties, and net profits interests but excluding production payments). These exchanges are not necessarily complicated, but certain rules must be followed to qualify for tax deferral.

Our lawyers routinely assist with the most complicated 1031 exchange issues, such as:

  • partnerships, including limited liability companies (LLCs), and their "drop and swap" transactions involving tenancy-in-common (TIC) ownership, which allows individual partners the choice to cash out of a particular investment or instead defer tax through an individual partner level 1031 exchange
  • partnership installment note (PIN) transactions involving the redemption of certain partner interests via qualified intermediary promissory notes
  • "reverse" 1031 exchanges both under the Revenue Procedure 2000-37 safe harbor and as non-safe harbor transactions under Bartell
  • exchanges involving various oil and gas assets as well as associated pipelines and equipment
  • build-to-suit (i.e., new construction) transactions
  • timber exchanges

In addition, our attorneys routinely advise on thorny issues such as whether novel property types are of "like kind," refinancing exchange property immediately before or immediately after a transaction, restructuring partnerships as tenancies-in-common to position for 1031 exchange deferral, using "tracking allocations" within partnerships to achieve synthetic "drop and swaps," and giving other tax advice and opinions associated with navigating the Section 1031 sphere.