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Income taxSubject 17 of 19

Like-kind exchange

A tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.

Also called: 1031 exchange, section 1031 exchange

Direct answer

What does Like-kind exchange mean?

A tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.

Exam cue: Current federal section 1031 treatment is limited to qualifying real property and has strict timing, identification and holding-purpose rules.

What does it look like in a question?

New York example

An investor exchanges one rental property for another through a properly structured transaction.

Common exam trap

What should you not confuse it with?

A personal main home or property held primarily for sale does not automatically qualify.

Related income tax terms

Adjusted basisOriginal basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.Amount realizedThe total value received on a disposition, adjusted for selling expenses and other items as tax law provides.BasisA tax measurement used to determine gain, loss, depreciation and other tax consequences for property.Capital gainGain from the sale or exchange of a capital asset, calculated under tax law and subject to classification and exclusions.Depreciation recaptureTax treatment that can recharacterize or specially tax part of gain tied to prior depreciation deductions.Principal residenceA person's main home for tax purposes, determined from use and the applicable facts and rules.
Sources used2 references with section locators

The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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