Like-Kind Property

IRC Section 1031 limits like-kind property to only certain types of real property. The term like-kind property refers to the nature or character of the property, rather than its grade or quality. Real property must be exchanged for like-kind real property. Furthermore, real property held for investment can be exchanged for real property used in a trade or business or real property held for use in a trade or business can be exchanged for real property held for investment.


Personal property is not eligible for 1031 exchange tax deferral.

Regarding real property, a taxpayer’s primary residence and property held primarily for resale or dealer property are excluded from tax deferral under Section 1031. Section 121 provides tax exclusion for a taxpayer’s primary residence held for two (2) of the past five (5) years.


The types of real property which can be exchanged under Section 1031 are very broad. Any real property held for productive use in a trade or business or for investment, whether improved or unimproved, is considered like-kind real property. Examples of like-kind real property include:

  • Unimproved property for improved property;
  • Fee for a leasehold with 30 or more years;
  • Vacant land for a commercial building;
  • Duplex for a retail property;
  • Single-family rental for a multi-family apartment;
  • Conservation easement for warehouse to be used in the taxpayer’s business;
  • Industrial property for rental vacation property in a resort area.