1031 Exchange

If I sell an apartment building, I must buy another apartment building because of the 1031 “like-kind” requirement.

 

FALSE

 

The “like-kind” requirement does not mean selling and buying the same exact type of property. In an IRC §1031 transaction, you can exchange real property for virtually any other real property in the United States, as long as the property is held for productive use in a trade or business or for investment purposes. The term “like-kind” refers to the nature or character of the property, not its grade or quality. For this reason, nearly all real property is like-kind to all real property. You can sell an apartment building and exchange it for a strip mall, a warehouse, an office building, a vacant lot, farmland, etc.