What “Like-Kind” Really Means in a 1031 Exchange

One of the most common questions investors ask about a 1031 exchange is: “What qualifies as like-kind property?” The answer is often broader than many people expect.

What “Like-Kind” Really Means
In IRS terms, “like-kind” doesn’t mean the properties must be identical—it simply means they must be held for investment or business purposes. For example, you can exchange:

• An apartment building for raw land

• A rental home for a commercial property

• Vacant land for a warehouse

What Doesn’t Qualify
Personal residences, fix-and-flip properties, or property primarily intended for resale do not qualify. The key factor is that the property must be for investment or productive use in a trade or business.

Why It Matters
Understanding the flexibility of “like-kind” allows investors to diversify their portfolios, move into stronger markets, and build long-term wealth—all while deferring capital gains taxes.

Thinking about exchanging into a new type of property? A 1031 exchange might open more doors than you realize. Contact us today to explore your options!