What is Like-Kind?

1031 Exchanges allow property owners to defer taxes on capital gains by selling their appreciated real estate and buying other like-kind property instead of selling for cash and paying taxes.

 

Investors often assume that like-kind property means the same type of property as is currently owned. However, this is not the case. If the property is held for either investment purposes or business use, most real estate is considered like-kind.

 

The like-kind property definition includes several different property types. Investors exchanging out of a residential real estate property held for investment purposes, for example, can exchange into multifamily, industrial or retail buildings.

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