Like-Kind Property
Like-kind property is real estate that qualifies to be exchanged tax-deferred under Section 1031: property held for investment or productive business use, traded for other property held the same way. For real estate the standard is broad — raw land, rentals, offices, and warehouses are all like-kind to each other.
The misconception worth correcting
"Like-kind" sounds like it means "same type," and it doesn't. A duplex can exchange into farmland; a strip-mall interest can exchange into an apartment building. What matters is the purpose — both sides must be held for investment or business use, not personal use or quick resale.
What doesn't qualify
Primary residences (personal use), fix-and-flip inventory (held for sale, not investment — "dealer property"), property outside the U.S. exchanged for U.S. property, and — since the 2018 tax law — anything that isn't real property at all: equipment, vehicles, and other personal property lost 1031 treatment entirely.
Why it matters in conversations
Investors often rule out an exchange because they assume they must buy the same kind of asset they're selling. Knowing the standard is purpose, not type, widens the exit paths you can put in front of an owner — a definition to know cold, and a detail their CPA should confirm.