10/02/2026
Does “like-kind” mean you have to exchange one rental house for another rental house?
No. And this is one of the most common misconceptions about 1031 Exchanges.
For 1031 purposes, “like-kind” refers to the nature or character of the property, not whether the properties look alike or serve the exact same purpose.
That means qualifying investment or business real estate may include:
Single-family rental properties
Multi-family properties
Office buildings and retail centers
Commercial and industrial properties
Farmland
Undeveloped or raw land held for investment
Certain Tenant-in-Common (TIC) interests
Qualifying Delaware Statutory Trust (DST) interests
In other words, an investor may be able to exchange farmland for an apartment building, raw land for commercial property, or a rental home for another qualifying real estate investment.
What generally does NOT qualify?
Properties held primarily for personal use, such as a primary residence, generally don't qualify. Neither does real estate held primarily for sale, such as certain flips or development property.
Stocks, bonds, notes, partnership interests and other securities or intangible assets generally aren't eligible real property for a 1031 Exchange either.
The key isn't whether the properties are identical. It's how the properties are classified and held.
Not sure whether your property could qualify for a 1031 Exchange? Reach out to us to learn more about the exchange process. 310-986-8092