Atlanta Deferred Exchange
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Atlanta Deferred Exchange

Can I sell some land and do a 1031 exchange into an apartment building?

Q: I’ve heard tax deferred exchanges referred to as “like-kind” exchanges. I am selling a piece of undeveloped land and want to buy a small apartment building. Would these two properties be considered like-kind?

A: Yes. The “like-kind” definition for real estate is very broad. The IRS Code defines “like-kind” as any property “...held for productive use in a trade or business or for investment.” So by definition, any investment real estate falls under the definition of property held for investment. Because of this flexibility, a rental condo can be exchanged for an apartment building or a distribution warehouse can be exchanged for several tracts of undeveloped land. The type of investment real estate and even the number of properties sold or acquired need not be the same.