Section 1031 Like-Kind Exchange


Since 1921, U.S. tax law has recognized that the exchange of one investment or business-use property for another of like-kind results in no change in the economic position of the taxpayer, and therefore, should not result in the immediate imposition of income tax. The exchange rules permit the deferral of taxes, so long as the taxpayer satisfies numerous requirements and consummates both a sale and purchase within 180 days.  Real estate investors and commercial real estate practitioners place a very high priority on retaining the current like-kind exchange rules.

Political Advocacy

Current Legislation/Regulation

None at this time.


Find NAR's letters, testimonies, bill updates, and more on the NAR Federal Issues Tracker

Legislative Contact(s):

Evan Liddiard,

Jamie Gregory,

Erin Stackley,

Regulatory Contact(s):

Evan Liddiard,

What is the fundamental issue?

Since 1921, U.S. tax law has recognized that the exchange of one investment or business-use property for another of like-kind results in no change in the economic position of the taxpayer, and therefore, should not result in the immediate imposition of income tax. The like-kind exchange rules permit the deferral of taxes, so long as the taxpayer satisfies numerous requirements and consummates both a sale and purchase of replacement property within 180 days. Real estate investors and commercial real estate practitioners place a very high priority on retaining the current like-kind exchange rules.

I am a real estate professional. What does this mean for my business?

The exchange rules often provide a real estate professional with an opportunity to facilitate two transactions: the sale of the relinquished property and the purchase of the replacement property. Any curtailment of the exchange rules will make both pieces of exchange transactions more difficult to conclude and would mean that many transactions would not take place. The like-kind exchange technique is among the most important of all tax provisions for real estate investors and commercial real estate professionals.

NAR Policy:

NAR opposes any change that would undermine the deferral mechanisms associated with exchanges or lead to fewer transactions.  

The like-kind exchange technique is fundamental to the real estate investment sector. The current law provides investors with a great deal of flexibility in managing their real estate portfolio. Real estate is essentially an illiquid asset that requires substantial commitments of cash. Flexibility is needed in order to assure the free movement of property and capital. This, in turn, results in economic growth and job creation.

Legislative/Regulatory Status/Outlook

No bipartisan legislation related to Section 1031 was introduced in the 114th Congress or so far in the new 115th Congress (which began in January 2017). However, identical bills were introduced in the 114th Congress in both the House and Senate that would limit the use of the like-kind exchange deferral as a way of partially offsetting the cost of provisions that would shore up multiemployer pension plans. Support for these bills was limited to a relatively small number of Democrats, which indicates that there is not much chance of this legislation moving forward in a Republican-controlled Congress. 

Of more concern, however, is the fact that Members of Congress in both Houses and both parties continue to express the desire to overhaul the tax system, with some leaders indicating that "everything is on the table." A staff discussion draft released by former Finance Committee Chairman Max Baucus (D-MT) in November 2013 proposed repealing Section 1031. A similar tax reform draft plan was released by former Ways and Means Committee Chairman Dave Camp (R-MI) in February 2014, which would also repeal Section 1031.

The likelihood of comprehensive tax reform moving toward enactment has gone up considerably with the election of Donald Trump and another Republican-controlled Congress. So far, none of the leading tax reform plans explicitly state that Section 1031 Like-Kind Exchanges are targeted for repeal. However, these plans are not fully developed and tax policy experts believe that as tax reform moves through the legislative process, more provisions will be eliminated to help keep tax reform revenue neutral. And because 1031 is generally perceived by much of the population and even some policymakers as an unwarranted “loophole” that is only available to the wealthy, the provision is thought be vulnerable to attack.

NAR is working with other interested stakeholders to oppose the repeal or limitation of the like-kind exchange provision and to educate Members of Congress and their staffs on the importance of this provision to the economy. For example, NAR is an active member of two separate coalitions devoted to preserving the 1031 like-kind exchange. These coalitions have funded two separated studies on the impact that repealing Section 1031 would have on the economy and on the real estate sector. Moreover, the coalitions continue to have meetings with Members of Congress to explain the importance of tax-deferred exchanges in their states and districts. Also, NAR lobbyists often mention the importance of keeping 1031 when meeting with Members and staff on other issues.

NAR Committee:

Commercial Legislation and Regulatory Advisory Board

Federal Taxation Committee


We've already done the research for you.

Before you search elsewhere, take advantage of the research we've already done for you. Formerly known as Field Guides, References tabs contain links to external articles, titles from the NAR Library eBooks collection, websites, statistics, and other material to provide a comprehensive overview of perspectives on each topic. EBSCO articles (E) are available only to NAR members and require a password.

1031 Exchanges: The Basics

The Power of Section 1031 Exchanges for Tax and Estate Planning, (Orange County Business Journal, Apr. 11, 2016) E

Selling your house? Two is the magic number for a big tax break, (The Washington Post, Apr. 8, 2016) 

Under Scrutiny, (Shopping Centers Today, Nov. 2015) E

The 4-1-1 on 1031 exchanges, (The Journal Record, Aug. 27, 2015) E

What Happens When You Receive a Promissory Note for Your Relinquished Property in a Section 1031 Exchange?, (Journal of Passthrough Entities., Jan./Feb. 2015) E

Compound logic: The Wealth-Building Power of 1031 Exchanges Just Makes Sense, (Commercial Investment Real Estate, Sept.-Oct. 2008).

Property taxes can trim taxes, (Investor’s Business Daily, Nov. 11, 2013). E

1031 exchange data since 1995, (The Source, Dec. 14, 2012).

Hot Swap: Property Exchanges: As boomers retire and relocate, these tax-deferred deals offer a sweet way to offload real estate investments, (Financial Planning, Dec. 2012). E

How to Buy Like-Kind Exchange Property, (, Sept. 13, 2012).

Internal Revenue Code Section 1031, (Wikipedia).

1031 Exchange Manual, (1031 Corporation).

1031 Exchange Do's and Don'ts, (National Real Estate Investor, Aug. 1, 2007).

Rules, Forms, & Guidelines From the IRS

Form 4797, Sales of Business Property

Publication 544: Sales and Other Disposition of Assets

Like-Kind Exchanges - Real Estate Tax Tips (2012).

Form 8824, Like-Kind Exchanges

1031 Exchanges for REALTORS®

Section 1031 Like-Kind Exchange, (National Association of REALTORS®).  

1031 Tax Deferred Like-kind Exchanges, (REALTORS® Land Institute Blog). 

Tax Deferred 1031 Exchanges Course, (REALTORS® Land Institute).  

2015 NAR President’s Op-Ed: Proposal to End Popular Tax Exemption Draws Scrutiny (Scotsman Guide, Jan. 2016). 

Like-Kind Exchange Survey, (National Association of REALTORS®, July 2015). 

1031 Exchanges:  Every investor can use this reinvestment tool, (Commercial Investment Real Estate, Nov./Dec. 2015). 

Advocacy: 5 Things to Know About 1031 Like-Kind Exchanges, (Commercial Connections, Summer 2015). 

Section 1031 Exchanges are Important to a Healthy Economy, (Terra Firma, Aug. 2015). 

Don’t Let Clients Miss a Big 1031 Exchange Opportunity, (REALTOR® Magazine Daily Real Estate News, Nov. 12, 2013).

1031 Timing: Reverse Exchanges Can Go in Either Direction, (Commercial-Investment Real Estate, May-June 2012).

The ‘State of the Art’ in Like-Kind Exchanges, 2012, (Journal of Taxation, May 2012). E

Are Underwater Like-Kind Exchanges the Answer?, (Journal of Taxation, Nov. 2011). E

1031 Exchanges in a Foreclosure Situation, (, Mar. 5, 2010).

How to Maximize Your 1031 Exchange, (National Real Estate Investor, Mar. 2010). E

Like-Kind Exchanges: Issue Summary, (National Association of REALTORS®).

Quiz: 1031 Exchanges, (REALTOR® Magazine Online).

What Happens When you Sell an Exchange Property at a Loss?, (Realty Times, Mar. 5, 2009).

Exchange Your Strategy; Investors Should Consider Alternatives to 1031 Transactions, (Commercial-Investment Real Estate, Nov.-Dec. 2008).

1031 Exchanges: Tax-Deferred, Not Tax-Free, (REALTOR® Magazine Online, Nov. 5, 2008).

Delaware Statutory Trusts (DSTs)

TIC Tactic: The Delaware Statutory Trust Offers 1031 Alternative for Group Investors, (Commercial-Investment Real Estate, May-June 2009).

Using a DST in a 1031 Exchange, (Investor’s Business Daily, Feb. 18, 2014). E

TIC 2.0: DSTs are the Future of 1031 Real Estate Investing, (Commercial-Investment Real Estate, May-June 2013).

The Revival of the Delaware Statutory Trust, (Real Estate Investment & Finance, Jan. 28, 2013). E


Guide to 1031 Exchanges: Basics, Resources & Intermediaries ( -- Quick overview of how 1031 exchanges work, with links to recommended resources and a list of qualified intermediaries.

Federation of Exchange Accomodators (FEA)—Professional organization for exchange specialists. Includes directory of exchange companies & specialists around the U.S.

eBooks & Other Resources

Our eBooks collection contains a plethora of both audio and electronic books for learning a diversity of foreign languages and cultural etiquette standards. Below you will find a sampling of materials available; to identify additional materials visit our Library Catalog Advanced Search page and search for Subject: International or Subject: Foreign.

How to Invest in Real Estate And Pay Little or No Taxes: Use Tax Smart Loopholes to Boost Your Profits By 40% (Adobe eReader)

The Tax-Free Exchange Loophole: How Real Estate Investors Can Profit from the 1031 Exchange (Adobe eReader)

Books, Videos, Research Reports & More

The resources below are available for loan through Information Services. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Information Services at 800-874-6500 for assistance.

Building Wealth through 1031 exchanges, By Thomas Moylan & Moore McLaughlin, (All States 1031 Exchange Facilitator, LLC, 2006).

1031 Exchanges: How They Work, (Professional Exchange Accomodators, LLC. 2005).

The Tax-Free Exchange Loophole, By Jack Cummings, (John Wiley & Sons, Inc., 2005).

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