Many business owners or investors may not think about exchanging personal property because personal property in most cases does not appreciate in value over time to cause a taxable capital gain upon the sale of such items. However, business owners and investors often depreciate personal property on an annual basis.
In your past property acquisitions, you have probably encountered situations when you’ve had opportunities to acquire additional items that related to your main purchase. A seller may have been willing to include appliances and furniture with the sale of a home. A seller of a factory or a farm may have been willing to include equipment and tools in the sale. If you were attempting to complete a 1031 exchange with these purchases, you were probably warned that these extra items would be considered boot and could trigger a taxable event.
During the last two years, the syndicated 1031 exchange market, primarily existing of Delaware Statutory Trust (DST) programs with a few Tenant-in-Common (TIC) programs, has experienced a surge in transactions, raising record amounts of equity. Though real estate analysts anticipated this surge, the actual transaction amounts exceeded expectations.