• Home
  • About Us
    • Teammates
    • Ratings
    • Employment
      • Attorney
      • Paralegal
      • Executive Assistant
  • Development
    • Affordable Housing
    • Tax Credit Financing
  • Capital Market Transactions
    • Private Activity Bonds
    • Securities
  • Commercial Transactions
    • Business Entity Formations
    • Buying and Selling Businesses
    • Business Transactions
    • Nonprofits
  • Real Estate
    • Commercial Real Estate
    • Construction Contracts
  • Contact Us
  • Blog
  • Media
    • Press
    • Speaking Engagements
  • Testimonials

Lotzar Law Firm P.C.

Legal talent that pays for itself.
480.905.0300 x103 8687 E. Via de Ventura, Suite 115 Scottsdale, Arizona 85258

What is an IRC Section 1031 Exchange Process in Phoenix?

May 29, 2014 by Charles Lotzar

1031 exchange process in phoenixAn IRC Section 1031 Exchange is also called a like-kind exchange. A 1031 Exchange will allow you to shield the gains from the sale of a business or an investment property by reinvesting the funds in a similar type of asset.

A 1031 Exchange is a powerful tool for investors who wish to increase the value or scope of their investment portfolios without incurring tax expenditures on the gains from selling existing assets.  However, there are specific requirements that must be fulfilled to benefit from a 1031 exchange and it is essential that you follow the required procedures in order to realize the tax benefits. The Lotzar Law Firm, P.C. can represent clients in Scottsdale, Phoenix and throughout Arizona and guide them through the 1031 Exchange Process to protect their profits.

Understanding a IRC 1031 Exchange

When a business or investment property is sold for a profit, the sale normally triggers tax liability. However, a like-kind exchange makes it possible to defer the taxes that would normally be paid as part of the sale.

The proceeds must be invested in a similar property, but can include like-kind property in addition to liabilities, cash and other property that is not like-kind. However, 1031 Exchanges do not apply to certain kinds of property or assets including:

  • Stocks, Bonds and Notes
  • Inventory
  • Stock in trade
  • An ownership interest in a Partnership
  • Certificates of Trusts
  • Other debts/securities

The property or assets that you sold and the property or assets being purchased must be similar enough to actually qualify as “like-kind” property. The IRS defines like-kind property as property that has the “same nature, character or class.”  The quality of the specific items is not relevant. For example, selling an inexpensive property and realizing the gains on it can make it possible for you to enter into a like-kind transaction for the purchase of other types of real estate that is more valuable or that has a higher cost.

Both real and personal property can qualify for like-kind exchanges, but cannot be considered like-kind to each other.

In addition to restrictions regarding what qualifies as “like-kind” property, it is also important to understand the time limits associated with completing your transaction.  You have 45 days from the date of the sale of the property to identify potential replacement properties in writing. The replacement property must also be received and the exchange completed within 180 days of the earlier date of the sale of the exchanged property or the due date of the income tax return for the year in which the property is sold.

Lotzar Law Firm, P.C. can help clients with the 1031 Exchange Process in Phoenix to ensure they comply with requirements and protect their tax advantages. Call today to speak with a member of our legal team and learn more.

  • Author
  • Recent Posts
Charles Lotzar
Charles Lotzar
With more than 25 years of legal experience, Chuck Lotzar knows how to solve problems and make deals happen. He earned his Bachelor of Arts in Business from Michigan State University in 1982, and his Juris Doctorate from the University of Detroit School of Law in 1985. Mr. Lotzar has extensive experience dealing with public contracts and issues related to public officials and has been involved in bond financings with an aggregate value in excess of $5 billion.
Charles Lotzar
Latest posts by Charles Lotzar (see all)
  • How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income? - November 12, 2015
  • Property Tax Abatement vs. Property Tax Exemptions – GPLET - November 12, 2015
  • Can You Restructure Your Business Under the Arizona Entity Restructuring Act? - November 5, 2015

About Charles Lotzar

With more than 25 years of legal experience, Chuck Lotzar knows how to solve problems and make deals happen. He earned his Bachelor of Arts in Business from Michigan State University in 1982, and his Juris Doctorate from the University of Detroit School of Law in 1985. Mr. Lotzar has extensive experience dealing with public contracts and issues related to public officials and has been involved in bond financings with an aggregate value in excess of $5 billion.

Why We’re Not Your Typical Law Firm

logo 8687 E. Via de Ventura, Suite 115 Scottsdale, Arizona 85258 T (480) 905-0300 F (480) 905-0321 E info@lotzar.com

SITE NAVIGATION

  • SITE NAVIGATION
  • Home
  • About Us
  • Teammates
  • Press Coverage
  • What Clients Say
  • Speaking Engagements
  • Contact Us

FROM OUR BLOG

How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income?

Property Tax Abatement vs. Property Tax Exemptions – GPLET

Can You Restructure Your Business Under the Arizona Entity Restructuring Act?

REVIEWS

View and rate us
on Google

©2025 Lotzar Law Firm, P.C. All Rights Reserved. | Privacy Policy | Disclaimer