Like-kind exchange (Section 1031)
A like-kind exchange lets you defer gain when you trade real property held for business or investment for other such real property. Since 2018 it applies only to real property, not to equipment or vehicles.
Cash or other property received, called boot, is taxed up to the realized gain. In a deferred exchange the replacement property must be identified within 45 days and received within 180 days.
Example. Walt trades a warehouse with a $300,000 basis for a $500,000 office building plus $40,000 cash. He realizes $240,000 of gain but recognizes only the $40,000 of boot.
By Binod Raj Singh, CPA (licensed in Montana) · Updated for the 2026-2027 exam windows · Last updated 2026-11-05