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Mixed-Use Properties and 1031
What if I Live on my Farm? 
What if my Shop/Office is part of my Home?

For many people, working and living on the same property is routine, whether as part of a farm, a home office or some other arrangement like a shop, daycare or business-related storage. Claiming work-related expenses and depreciation is typically a part of those scenarios as well. So what happens when they decide to sell?


We refer to such properties as having "mixed use," combining work and living space in one place. When a sale occurs, both uses will have tax consequences that must be captured on your tax return(s). The business portion may have a taxable gain, either from appreciation or as a result of the depreciation taken, or perhaps both. In such a circumstance, can you effect a like-kind exchange and acquire suitable replacement property tax-free?

 Read More

Two Impact Studies Show Repeal of 1031 to Hurt Real Estate, Economy 
Two recent impact studies find similar results: a repeal of Section 1031 would slow the real estate market and the U.S. economy. The Federation of Exchange Accommodators (FEA) was one of many sponsors of each study.

The micro economic study, "The Economic Impact of Repealing or Limiting Section 1031 Like-Kind Exchanges in Real Estate," was released in July.  Professors David C. Ling and Milena Petrova reviewed more than 1.6 million commercial real estate transactions while authoring the study. The study concluded exchanges improve and increase investment.

In March, the "Economic Impact of Repealing Like-Kind Exchange Rules" study conducted by Ernst & Young concluded a repeal would slow economic growth, reduce GDP and hurt many small businesses.


Both studies show a repeal of Section 1031 would:
  • cause real estate values to drop;
  • increase the cost of capital;
  • increase the average holding period causing a "lock in" effect;
  • decrease the velocity of investment in the economy;
  • lead to higher rents in all sectors; and
  • cause the economy to contract.      

Read More 

Take Action Now! Tell Congress to Preserve 1031.   

Finally! Some Good News Regarding California Partnership Exchanges

The California State Board of Equalization (Board), the last administrative option for appeals, has found for a taxpayer and against the Franchise Tax Board (FTB) in a case where a group of taxpayers exchanged into fractional interests in a common replacement property. Their lender required that they contribute the tenancy-in-common interests into a partnership (single purpose LLC) seven months after the exchange.


Commonly referred to as "swap and drops," on the federal level the government has widely accepted such transactions, noting they represent only a change in form of ownership, without any impact on the tax attributes of the property in terms of the taxpayer. Related transactions, called "drop and swaps," have the reverse of that structure, where property is "dropped" out of a partnership in anticipation of an eventual exchange. FTB has aggressively pursued such transactions in California on the basis that they violate the "held for business or investment use" rule due to the short holding term either after the "drop" or after the "swap." According to FTB, the property has not been held for a qualified use for a long enough period and is ineligible for state tax deferral under Section 1031.


In the income tax world, a common qualifier for any tax rule is "except in California," and nowhere is this more true than in like-kind exchanges. This ruling by the Board - a unanimous decision - provides welcome relief indeed in a state where the pursuit of ever more tax revenue has become a critical drag on economic activity. It will be interesting to see what the consequences of this decision will be going forward.   

Trending this Month...  
Flips and Other Dealer Property  

Worker with construction tools. House renovation background.

We lost track of the number of inquiries we received regarding properties being flipped.  Unfortunately, Section 1031 specifically excludes property held for sale or treated as inventory, such as flips, dealer property, spec homes and building lots.  Our Exchange Officers are always happy to discussion your situation. 

 View All Recent Trends  

1031 CORP. Opens Washington State Branch
Welcomes Felip Holbrook
On June 8th, 1031 CORP. expanded its footprint  in the Pacific Northwest with the opening of a branch office in Yakima, Washington. We are thrilled to have Felip E. Holbrook, CES®, EA on our team. Felip, with nearly two decades of exchange experience, will oversee the Yakima office, help develop business in the Pacific Northwest for our two offices, chair our 1031 CORP. Education Committee and serve on our Audit and Risk Management Committee.            
1031 CORP. Welcomes New Team Members to Collegeville Headquarters
Over the past year, 1031 CORP. welcomed three new Team Members who interact with our clients daily and we'd like to introduce them to you.   
Gina Morris 



Gina, a licensed Pennsylvania REALTOR® for over a decade, joined the 1031 CORP. team in 2014 and quickly put her knowledge of real estate and closing practices to good use. Gina's attention to detail is essential to providing a worry-free exchange experience.


Angela Klisch



Angela joined the 1031 CORP. team in 2015 after successfully running her own business. With over 16 years of experience in a corporate work environment and possessing  excellent organizational, time management and communication skills, Angela keeps the exchange process seamless.    


Cindi L.



In 2015, Cindi returned to 1031 CORP. where she previously worked from 2006-2009 as an Exchange Officer. Her knowledge of the 1031 regulations and experience facilitating exchanges assist Cindi in her role as Exchange Account Manager. Her focus is on overseeing clients' exchange funds, including all deposits and withdrawal requests. 

Meet the Entire 1031 CORP. Exchange Team   

Wealth Building Webinars
The first Thursday of each month at 12 pm ET/11 am CT/10 am MT/9 am PT, we offer our complementary 1031 Exchanges Made Easy webinar as part of our Wealth Building Webinar Series designed to help you build and preserve wealth.    

Message from our President

Margo McDonnell

Dear Friends,

Many thanks to everyone who has already reached out to their Senators and Representatives. While no one thinks meaningful tax reform can still happen before the presidential election, we are very concerned a full repeal or limitations of Section 1031 could find its way into a tax bill as a "pay for" something else. We also worry that if a bill is introduced and it includes a repeal or limitations of 1031, it will be used as a starting point in 2017 when tax reform is expected to be a priority.

The Federation of Exchange Accommodators (FEA), the national trade association for exchange practitioners, is working hard to educate members of Congress and their staff about Section 1031 and how it is used. We are also alerting stakeholders of the threats facing 1031 and asking them to help spread our message. 1031 CORP. is a member of the FEA and I currently serve as president-elect.

Regardless of how you benefit from 1031, your voice is important. Click here and in just a few minutes, you can send a letter to Congress and tell them to preserve Section 1031.

 Warm regards,  

Article Exchange

Following are articles related to 1031 exchanges, taxes, real estate and related topics you may find of interest. 


Solid Real Estate Growth Predicted through 2017


April 11, 2015


Fed Time is Coming; Says C&W's McCarthy


August 4, 2015 


Like-Kind Exchange Survey 


July 10, 2015


If you have an article you would like to share, please forward it to
Margo McDonnell, CES®  and we'll include on next month's reading list.
Visit 1031 CORP. Exhibit at DIG Trade Show DIG Logo
Stop by the 1031 CORP. exhibit and visit Sue Umstead, Rich Heller and Joe Szajnecki while at the Diversified Investor Group (DIG) 2015 Trade Show & Educational Expo. The event will be held at Williamson's Banquet & Event Center in Horsham, PA on August 27th. The event is open to the public.
About 1031 CORP.
Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP . strives to provide a superior exchange experience for our customers and their advisors.  We provide our customers with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our customers and their advisors.  Every member of the exchange team is a Certified Exchange Specialist® and has the experience and expertise to facilitate even the most complex exchange transaction, including reverse, improvement and personal property exchanges.  Additional information can be found at www.1031CORP.com.
In This Issue

Margo McDonnell

Margo McDonnell, CES®
Certified Exchange Specialist®
1.800.828.1031 ext. 212
Mobile: 610.680.6896
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1031 CORP. Logo

Sue Umstead, CES ® 
Certified Exchange Specialist®
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520

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1031 CORP. Logo

Marissa LoCascio, CES ®
Certified Exchange Specialist®
Vice President
1.800.828.1031 ext. 210
Mobile: 610.742.4351

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Sanna Phinney, CES ®
Certified Exchange Specialist®
Senior Vice President
Bend, Oregon
1.800.828.10 Contact Sanna

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Rich Heller

Richard Heller, Esq., CCIM, CES®
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 Bettye Matthews

Bettye J. Matthews, CPA
Central Florida
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Joseph F. Szajnecki, CES®
Shale 1031CORP Interested in staying
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