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Like kind exchange

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Level 3

Can the sale of a residential rental home and purchasing a restaurant be regarded as Like Kind exchange? 

My client wants to sell his rental home and buy a restaurant using Section 1031 exchange.

I am not sure if this exchange is a valid 1031.

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Level 11
Level 11
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Level 3

Thank you, Terry, for the irs web site for 1030 exchange details, but that link still does not answer my question. By reading through the pub. it seems a rental home sale is a like kind exchange with purchase of a restaurant. I hope some one can give me a definite answer to my question.

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Level 15

"purchase of a restaurant" means what? Purchase of a building that the client will be landlord of, or purchase of a business that the client will be running, or purchase of the whole shebang? 

Basic concept of like kind is sell a piece of real estate and buy another piece of real estate. Start buying equipment and goodwill with the deal and you begin having difficulties. @singh needs to be clearer in the statement of the question. 

 


ex-AllStar
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Level 11

Purchase of a restaurant building yes, but not the business of the restaurant.

If the whole restaurant includes the building, then you have to separate out the value of the building. You probably have that in the agreement of sale. 

** I'm still a champion... of the world! Even without The Lounge.
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Level 15

What constitutes the restaurant purchase?

Real estate will qualify for 1031.

Furniture & equipment, supplies, inventory, website, etc will not.


ex-AllStar