Like-kind refers to the type of property being exchanged.
You can exchange any investment real estate for any other type of investment real estate - for example, vacant land can be exchanged for rental property. In most cases your personal residence is not a like-kind investment property. In addition, you can often exchange one property into multiple properties.
Upon the sale of an investment property, capital gains may be deferred by completing a 1031 exchange provided that the investor purchases another property that is considered to be “like-kind”. Almost any type of investment property will be considered “like-kind”.
This website is dedicated to Like-Kind Property exchanges that are exclusively real estate for real estate exchanges. There are other examples of investment property/real property that can be exchanged that are very interesting, e.g. Livestock, Trains, Airplanes, Collector’s Automobiles, and other real property.
IRC Section 1031 (a)(1) states:
“Like-kind” property. Properties are of like kind if they are of the same nature or character, even if they differ in grade or quality.”
“Like-kind” is broad.
Most exchanges must merely be of “like-kind”. The investor has a great deal of flexibility with the “like-kind” requirement and may purchase a property that is a different type (i.e., you can exchange raw land for an apartment building, sell a rental home and purchase a retail property), or even in a different location (i.e., sell a property in South Carolina and buy a property in North Carolina.) Or if you are an accredited investor, you can even exchange into a securitized fractional interest in a co-ownership structure (i.e., sell raw land and buy a replacement property interest in a DST that owns a 300-unit apartment complex.)
For more information regarding qualified Like-Kind Property in a 1031 Exchange click the link below.
If you have any questions regarding the "Like-Kind" Property 1031 Exchanges or any other exchange related matters please give Exclusive Financial Resources a call at (980) 242-2533, email Louis Herford at Louis.Herford@ExclusiveFinancialResources.com or schedule a 15-minute discussion here.