Like-kind property
Real estate held for investment or business use, being exchanged for other real estate held for investment or business use. Since 2018 the term applies only to real estate. Personal-use property doesn't qualify.
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Part 1 of 4
Why a seller cares
For a 1031 exchange, like-kind means real estate for real estate held for investment or business. A rental for a rental, a rental for raw land, a duplex for an office all qualify; your own home does not.
Part 2 of 4
A simple example
You sell a rental duplex and buy a small retail building with the proceeds. Both are investment real estate, so they are like-kind for the exchange.
| The swap | Like-kind? |
|---|---|
| A rental house for raw land held for investment | Yes |
| A rental house for a vacation home you will use | No; personal use does not qualify |
| A rental house for shares in a real estate fund | No; shares are not real property |
Like-kind is broad within real estate and stops at its edge.
Part 3 of 4
What people get wrong
That like-kind means the same type of building. It means real estate for real estate; the buildings can differ completely.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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