--- title: What is Like-Kind Property in Real Estate? description: A common misconception about the term like-kind property is that when you exchange one property for another, they must be the same size and/or type. image: https://www.realized1031.com/hubfs/Images/photo/abstract/like-kind-properties-rzh.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # What is Like-Kind Property in Real Estate? Posted Jan 19, 2020 ![Pictures of potential Like-Kind Properties in Real Estate.](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/like-kind-properties-rzh.jpg?width=629&name=like-kind-properties-rzh.jpg "Pictures of potential Like-Kind Properties in Real Estate.") After researching [1031 exchanges](https://www.realized1031.com/blog/what-is-a-1031-exchange), you might find yourself wondering what “like-kind property” really means when it comes to real estate. It’s a vague and sometimes misunderstood term when it comes to tax deferred exchanges. The Internal Revenue Code defines like-kind properties as those that have been held for productive use in a business or trade, or as an investment. Like-kind, as used in this code section, means a property that is “similar in nature or character, regardless of differences in grade or quality.” Still not clear? Basically, the code says that the property to be sold *and* the property to be bought must be qualified business or investment properties. This is why you can’t sell your own personal residence and expect 1031 tax deferral benefits. A property that has been used in a taxpayer’s business, including his/her place of office, is a qualified property. Additionally, any [real property](https://www.realized1031.com/education/glossary/real-property) that is held as an investment also qualifies for 1031 treatment. A common misconception about [like-kind property](https://www.realized1031.com/glossary/like-kind-property) is that when you exchange one property for another, they both have to be the same size and/or type. This is not the case. Real property can be exchanged for another real property and still be eligible for [capital gains tax deferral.](https://www.realized1031.com/glossary/capital-gain-tax) For example, raw land can be exchanged for an office building; a strip mall can be exchanged for a single-tenant, triple net investment property; and a rental house can be exchanged for fractional ownership in a high-rise apartment complex. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not like-kind to land. Real property involved in a 1031 exchange simply needs to be in the real estate realm and held as an investment to qualify as a business property, and to ensure the deferral of capital gains tax. Download The Guide To 1031 Exchange [![The 1031 Investor's Guidebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/1031-Exchange-eBook-250.png?width=250&height=250&name=1031-Exchange-eBook-250.png "Tackle the art and science of ...") ](https://www.realized1031.com/blog/what-is-like-kind-property-in-real-estate#blogform) Download eBook ---   --- ### The 1031 Investor's Guidebook ![Download The Guide To 1031 Exchange](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/1031-Exchange-eBook-550.jpg?width=550&height=650&name=1031-Exchange-eBook-550.jpg) Tackle the art and science of completing your 1031 exchange. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "After researching 1031 exchanges, you might find yourself wondering what “like-kind property” really means when it comes to real estate. It’s a vague and sometimes misunderstood term when it comes to tax deferred exchanges. The Internal Revenue Code defines like-kind properties as those that have been held for productive use in a business or trade, or as an investment. Like-kind, as used in this code section, means a property that is “similar in nature or character, regardless of differences in grade or quality.” Still not clear? Basically, the code says that the property to be sold and the property to be bought must be qualified business or investment properties. This is why you can’t sell your own personal residence and expect 1031 tax deferral benefits. A property that has been used in a taxpayer’s business, including his/her place of office, is a qualified property. Additionally, any real property that is held as an investment also qualifies for 1031 treatment. A common misconception about like-kind property is that when you exchange one property for another, they both have to be the same size and/or type. This is not the case. Real property can be exchanged for another real property and still be eligible for capital gains tax deferral. For example, raw land can be exchanged for an office building; a strip mall can be exchanged for a single-tenant, triple net investment property; and a rental house can be exchanged for fractional ownership in a high-rise apartment complex. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not like-kind to land. Real property involved in a 1031 exchange simply needs to be in the real estate realm and held as an investment to qualify as a business property, and to ensure the deferral of capital gains tax.", "articleSection" : [ "1031 Exchange" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-03-15T15:58:34+0000", "datePublished" : "2023-03-15T15:58:34+0000", "description" : "A common misconception about the term like-kind property is that when you exchange one property for another, they must be the same size and/or type. ", "headline" : "What is Like-Kind Property in Real Estate?", "image" : { "@type" : "ImageObject", "height" : 506, "url" : "http://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/like-kind-properties-rzh.jpg", "width" : 800 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/what-is-like-kind-property-in-real-estate", "name" : "What is Like-Kind Property in Real Estate?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "http://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/like-kind-properties-rzh.jpg" } ```