Bayard’s Doug M. Hershman and Trisha W. Hall presented on the topic of like kind exchanges in a program entitled “There’s Still Magic in Real Estate: What the Magician Will Need to Know About Like Kind Exchanges to Make Capital Gains Disappear.

The one-hour presentation at Bryn Mawr Trust Company’s monthly seminar series in Haverford, Pennsylvania covered the basics of qualified exchanges in real estate. Section 1031 of the Internal Revenue Code and related regulations allow for the transfer of property held for business or investment purposes for another similar property without incurring capital gains tax on the transaction. Capital gains tax is deferred until the property is later sold, or may be eliminated altogether at death when the owner’s estate will receive a step-up in the basis in the property.

Hershman explained the rules and mechanics of qualified exchanges, including deferred reverse and deferred forward exchanges. He fielded several questions from audience members on required holding periods, mortgage financed property and transfers by partnerships. Hall focused her portion on the presentation on the concept of boot, how basis in property is affected in an exchange, and depreciation recapture.