IRC Section 1031 does not limit like-kind property to 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. Real property is not considered like-kind to personal property. The rules for 1031 exchanges of personal property are more specific than for real property exchanges.


A taxpayer’s primary residence and property held primarily for resale or dealer property are excluded from tax deferral under IRC Section 1031. IRC 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
  • Industrial property for rental vacation property in a resort area.


Personal property that qualifies for a 1031 exchange must also be held for productive use in a trade or business or for investment. In general, qualifying personal property must both be in the same General Asset Class or within the same Product Class. The Standard Industrial Classification Manual provides categories for General Asset Classes of depreciable tangible personal property. It is critical to review any personal property transactions with tax and/or legal advisors because the rules for personal property 1031 exchanges are far more restrictive than for real property. Examples of qualifying personal property exchanges include:

  • Mexican gold coins for Austrian gold coins
  • Aircraft for aircraft
  • Commercial fishing boat for a commercial fishing boat
  • Restaurant equipment for restaurant equipment
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