Short answer: Any real property in the United States that you hold for investment or for use in a trade or business qualifies, and it can be exchanged for any other such real property. Rentals, land, commercial buildings and DST interests all work. Your primary home, fix-and-flip property, stocks, partnership interests and personal property such as equipment do not.
Reviewed by Jon Hilley. Last updated September 29, 2026.
The real estate exchange 1031 rules are broader than most investors expect. Under the 1031 exchange rules, like-kind refers to the nature of the property, not its type or quality. Any US real property held for investment or business is like-kind to any other US real property held the same way, so you can trade land for an apartment building or a warehouse for a rental condo.
Two tests decide whether a property qualifies: it must be real property, and you must hold it for investment or productive use in a business, both the property you sell and the property you buy.
Key rules
- Real property only: since the Tax Cuts and Jobs Act, exchanges completed after December 31, 2017 are limited to real property (IRC §1031(a)(1); Pub. L. 115-97).
- Held for investment or business: both properties must be held for productive use in a trade or business or for investment (IRC §1031(a)(1)).
- Like-kind is broad: improved and unimproved real estate are like-kind to each other (Treas. Reg. §1.1031(a)-1(b)).
- No dealer property: real property held primarily for sale does not qualify (IRC §1031(a)(2)).
- US for US only: US real property and foreign real property are not like-kind (IRC §1031(h)).
What property types are eligible for a 1031 exchange?
What counts as 1031 property is set by the regulations, which define real property to include land, buildings, other inherently permanent structures and their structural components (Treas. Reg. §1.1031(a)-3). In practice, all of these qualify when held for investment or business use:
- Rental property: single-family rentals, multifamily, vacation rentals that meet the rental-use tests
- Commercial property: office, retail, industrial, self-storage, hotels
- Land: vacant land, farmland, ranchland
- Fractional interests: tenant-in-common interests and properly structured Delaware statutory trust interests (Rev. Rul. 2004-86)
- Long-term leaseholds: a leasehold of 30 years or more is like-kind to a fee interest (Treas. Reg. §1.1031(a)-1(c))
- Other real property interests: easements, options to buy real property, stock in a cooperative housing corporation, water and air space over land, and unsevered natural products such as standing timber and minerals in the ground (Treas. Reg. §1.1031(a)-3)
Mineral rights and oil and gas royalty interests are commonly treated as real property as well, but how a particular interest is classified can depend on its terms and on state law, so confirm it with your tax advisor before you rely on it.
Which type of property does not qualify for a 1031 exchange?
- Your primary residence: it is personal use property, though the §121 exclusion may apply instead.
- Flips and developer inventory: property held primarily for sale.
- Securities, entity interests and digital assets: stocks, bonds, notes, REIT shares, partnership or LLC interests, and cryptocurrency.
- Personal property: equipment, vehicles, furniture, artwork and business goodwill.
- Foreign property exchanged for US property: foreign for foreign can work, but not across the border.
How is held for investment judged?
There is no minimum holding period in the statute. What matters is your intent when you sell and when you buy, shown by how you actually use the property: rented at fair market rent, held as land for appreciation, or used in your business. Property you buy intending to resell quickly, or to move into right away, fails the test even if it is technically real estate.
Mixed sales
If a sale includes both real property and other assets, such as a furnished short-term rental or an operating business, only the real property portion is covered. The furniture, equipment or goodwill is taxed as a regular sale.
Example: rental house into a retail building
- Relinquished property: single-family rental, sold for $700,000 net of selling costs
- Adjusted basis: $300,000
- Realized gain: $400,000
- Replacement property: small retail building, $750,000
- Funded by: $700,000 of exchange funds plus $50,000 of the investor's own cash
- Boot received: $0
- Gain deferred: $400,000
- Replacement basis: $350,000 ($750,000 minus $400,000 deferred gain)
Residential and commercial real estate are like-kind, so the full $400,000 gain is deferred. The replacement basis also equals the old $300,000 basis plus the $50,000 of added cash. This example assumes no mortgage on either property.
Common mistakes
- Assuming like-kind means same type: we regularly hear from investors who think they must buy another duplex. Any US investment or business real estate works.
- Converting a home the month before selling: the most common eligibility problem we see is a former residence or vacation home with no real rental history.
- Forgetting the personal property in a sale: we see furnished rentals and small businesses sold with no price allocation, which makes it hard to separate the part that qualifies from the part that does not.
- Buying in a different name: the taxpayer who sells must be the taxpayer who buys. We see deals where a spouse or a new LLC was added at the last minute.
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