What Is a Like-Kind Exchange?

A tax-deferred transaction allowing the exchange of real property used for business or investment for another property of similar nature or character.
The key benefit: deferral of capital gains tax on the sale of the original property.
A Like-Kind Exchange, also known as a 1031 Exchange, is a powerful tax-deferral strategy under Section 1031 of the Internal Revenue Code.
Generally, Like-Kind exchange transactions create challenges for regular tax preparers. Luis Ramirez CPA has vast knowledge in reviewing and auditing IRC 1031 transactions. If you or your client is in need for expert tax advice and tax preparation services call the office of Luis Ramirez, CPA.

Luis Ramirez CPA. Like-Kind- Exchange tax free real estate exchange Walnut

Strategic Use Cases

Swapping raw land for rental property, or an apartment complex for a medical office, qualifies as like-kind. Useful for portfolio rebalancing, estate planning, or transitioning into more profitable property types.

Key IRS Rules (Post–Tax Cuts and Jobs Act)

Only real property qualifies—personal or intangible property (e.g., equipment, artwork, patents) no longer eligible after 2017.
Properties must be held for investment or business use, not for resale or personal use.
Real estate in the U.S. is not like-kind to foreign real estate.
Form 8824 must be filed to report the exchange.

Timing Rules

45-day identification window: Replacement property must be identified within 45 days of selling the original.
180-day exchange window: The replacement property must be acquired within 180 days.

Tax Implications

No gain or loss recognized if the exchange meets all requirements.
If boot (cash or non-like-kind property) is received, gain is recognized to the extent of the boot.
Depreciation recapture is deferred but not eliminated.

What Is a Like-Kind Exchange?

Luis Ramirez CPA. Like-Kind- Exchange tax free real estate exchange Walnut

Strategic Use Cases

Key IRS Rules (Post–Tax Cuts and Jobs Act)

Timing Rules

Tax Implications

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