Real Estate & Investing

Like-Kind Exchange

A like-kind exchange, often called a 1031 exchange, is a tax rule that can defer gain when qualifying investment or business real estate is exchanged under the required rules.

Quick answer

A like-kind exchange, often called a 1031 exchange, is a tax rule that can defer gain when qualifying investment or business real estate is exchanged under the required rules.

It matters because timing, identification, and property-use rules need to be handled correctly to preserve deferral.

An investor selling one rental property and buying another may explore a like-kind exchange to defer gain.

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Plain-English Definition

What Like-Kind Exchange means

A like-kind exchange, often called a 1031 exchange, is a tax rule that can defer gain when qualifying investment or business real estate is exchanged under the required rules.

Why it matters It matters because timing, identification, and property-use rules need to be handled correctly to preserve deferral.
Simple example An investor selling one rental property and buying another may explore a like-kind exchange to defer gain.
Related Questions

Questions people ask about Like-Kind Exchange

What does Like-Kind Exchange mean?

A like-kind exchange, often called a 1031 exchange, is a tax rule that can defer gain when qualifying investment or business real estate is exchanged under the required rules.

Why does Like-Kind Exchange matter?

It matters because timing, identification, and property-use rules need to be handled correctly to preserve deferral.

What is a simple example of Like-Kind Exchange?

An investor selling one rental property and buying another may explore a like-kind exchange to defer gain.

When should I ask a CPA about Like-Kind Exchange?

Ask a CPA when the term affects property tax planning, rental activity, depreciation, basis, or gain on a sale.

How is Like-Kind Exchange different from Capital Gains Tax?

Like-Kind Exchange means A like-kind exchange, often called a 1031 exchange, is a tax rule that can defer gain when qualifying investment or business real estate is exchanged under the required rules. Capital Gains Tax means Capital gains tax is the tax on profit from selling a capital asset for more than its basis. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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