Like-Kind Requirement

One of the requirements to qualify for a 1031 exchange is the relinquished and the replacement property must be of “like-kind”. This term refers to the nature, character or class of the property, and does not refer to the grade or quality. There are various “like-kind” properties available to exchangers. The IRS does not require you to sell and purchase the exact same type of property, but rather exchange within the class of properties. Keep in mind, however, that property outside of the United States does not qualify as like-kind to property inside the United States. Otherwise, the types of real estate which can be exchanged are extremely broad; therefore, we have provided an example below.