What is the like-kind requirement in a 1031 exchange?

The like-kind requirement means that the relinquished property, or property being sold, and the replacement property, the property being acquired, must both be real property held for investment or business purposes. However, like-kind is defined broadly—the properties do not need to be identical.

Examples of like-kind exchanges:

Selling a rental property and buying a multifamily apartment
Exchanging raw land for a retail shopping center
Swapping an office building for an industrial warehouse
Selling business property and investing in a Delaware Statutory Trust (DST)

Properties that don’t qualify as like-kind:

Primary residence
Foreign real estate
Stocks, bonds or other securities
Real estate partnership interests
Personal property

As long as both properties are investment or business real estate, they typically qualify for a 1031 exchange.