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Like Kind - Personal Property Exchange

A 1031 tax deferred exchange allows investors to defer capital gain on the purchase and sale of like kind personal property, such as aircraft, automobiles, and business equipment. With respect to personal property exchanges the like kind requirements are narrower than those for real property exchanges. Generally, to qualify as "like kind" the relinquished and replacement depreciable personal property must be in the same General Asset Class or Product Class. There are 13 General Asset Classes:

  • Office furniture, fixtures and equipment
  • Information systems (computers and peripheral equipment)
  • Data handling equipment, except computers
  • Airplanes, except those used commercially, and helicopters
  • Automobiles and taxis
  • Buses
  • Light general purpose trucks
  • Heavy general purpose trucks
  • Railroad cars and locomotives, except those
    owned by railroad transportation companies
  • Tractor units for use over-the-road
  • Trailers and trailer mounted containers
  • Vessels, barges, tugs and similar water-transportation equipment, except those used in marine construction
  • Industrial steam and electric generation and/or distribution systems

Although there are no asset classes for non-depreciable tangible property and intangible personal property, such as copyrights and franchise agreements, such property may be eligible for tax deferred treatment when exchanged for like kind property, i.e., property of the same nature and character. Unfortunately, goodwill of a business is not considered like kind to goodwill of another business, even where the businesses are the same.

While the definition of like kind is stricter when it comes to personal property - investors may still take advantage of tax deferred treatment in an IRC 1031 exchange in the sale of investment personal property. The personal property exchange can be utilized to relocate a business, to upgrade equipment, or to streamline production by replacing outdated technology and machinery with more efficient models.

  • Like kind personal property includes:
  • Livestock of the same sex
  • Automobiles for automobiles
  • Buses for buses
  • Corporate aircraft for corporate jet
  • Doctor practice for doctor practice
  • Manufacturing equipment for manufacturing equipment
  • Restaurant equipment for restaurant equipment

Please contact one of our offices to speak with an exchange professional to discuss the like kind requirements for your personal property transaction.