1031 Exchange Investment Property

What Qualifies as Investment Property?

Any real property held for investment or business use qualifies — as long as it is not your primary residence or personal vacation home. The IRS focuses on the intent and use of the property, not its physical characteristics.

• Single-family rental homes
• Multi-family apartment buildings
• Commercial office buildings
• Retail shopping centers
• Industrial warehouses
• Vacant land held for investment
• Farmland and agricultural property

The Like-Kind Requirement

The 'like-kind' requirement is much broader than most investors realize. Any investment real property can be exchanged for any other investment real property — regardless of property type. You can sell a single-family rental and buy a commercial building, or sell farmland and buy an apartment complex.

Holding Period Considerations

While the IRS does not specify a minimum holding period, properties held for less than one year may raise questions about investment intent. Most tax advisors recommend holding properties for at least one to two years before exchanging.