What is a Like Kind Property?

A like-kind property must be an investment property (Non-Owner Occupied), not a personal property (Owner Occupied).

According to the IRS:

“Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence does not qualify for like-kind exchange treatment.” (a second home or vacation home can qualify under strict IRS safe harbor guidelines)

 

According to the IRS like-kind property is defined as:

“Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, Commercial real property that is improved with an office building or unimproved vacant land is like-kind to a residential rental house. One exception for real estate is that property within the United States is not like-kind to property outside of the United States.