Quick Takeaways

  • The 1031 like-kind exchange just turned 100 years old, and has been helping Americans exchange property since 1921
  • Like-kind exchanges are not only for the wealthy, a look at recent exchanges show that only 5 percent of recently exchanged properties were held by corporations
  • “The great majority of properties now swapped under the like-kind exchange would not be sold if tax was due. Rather, their owners would continue to sit on the property, and the growth opportunity for putting the investment to better use would be wasted with the government collecting little in extra revenue”

Source: Like-Kind Exchange: Myth Busters (National Association of REALTORS®, May 6, 2021)

1031 Like-Kind Exchanges have been a part of real estate for one hundred years. A way to trade properties instead of going through the traditional buying and selling process, like-kind exchanges also often result in the ability to bypass capital gains taxes. These transactions are complicated and have many special rules.

The IRS has many rules regulating like-kind exchanges, which affect taxes sometimes drastically. You can view the various forms and directions on the IRS website.

Like-kind exchanges can provide REALTORS® with the opportunity to work with two properties, and NAR finds it an essential part of the real estate sector. They promote investment, job growth, and can greatly benefit underserved markets.

Delaware Statuary Trusts (DSTs) are a way to participate in 1031 exchanges without becoming the complete owner of a traded property. DSTs allow up to 100 investors to participate in the sharing of a property, such as a large medical building, and gain passive benefits. They can apply to any type of residential or commercial property.

See References for more information.

Political Advocacy

Current Legislation/Regulation

None at this time.


Letters to Congress
Issue summary
NAR Federal Issues Tracker

Legislative Contact(s):

Evan Liddiard,

Erin Stackley,

Regulatory Contact(s):

Evan Liddiard,

What is the fundamental issue behind Section 1031?

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 Like-Kind Exchange 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 on Like-Kind Exchange

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 on Section 1031

During the presidential campaign of 2020, then-candidate Joe Biden’s campaign listed the section 1031 like-kind exchange as an unwarranted loophole that largely benefits higher-income taxpayers and indicated that if elected, he would repeal it.

In early 2021, the Biden White House recommended to Congress that the tax deferral from like-kind exchanges be limited to $500,000 per taxpayer per year in order to help offset the cost of his infrastructure proposals.  While this may seem like a large amount to many, such a limit would greatly diminish the use of section 1031 and seriously damage the real estate sector of the economy.

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 a leading member of a large coalition devoted to preserving the 1031 like-kind exchange. This group has funded two separated studies on the impact that repealing or limiting Section 1031 would have on the economy and on the real estate sector. Moreover, the coalition continues to have meetings with Members of Congress to explain the importance of tax-deferred exchanges in their states and districts. Also, NAR lobbyists continually stress the importance of keeping 1031 intact when meeting with Members and staff on other issues.

NAR Committee

Federal Taxation Committee

Commercial Federal Policy Committee


NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

1031 Exchanges: The Basics

NAR Touts ‘Resounding Progress’ on Several Federal Policy Issues (RISMedia, Nov. 20. 2021)

“We were looking at a very ugly situation as far as the tax increase proposal to pay for the trillions of dollars in new spending that was proposed,” Liddiard said, pointing to proposed limits or elimination of 1031 exchanges at the start of 2021. While he assured the audience that he was “confident that 1031 is off the table,” Liddiard claimed that was only the tip of the iceberg of potential tax increases.”

1031 Exchange Rules: What You Need to Know (Investopedia, Nov. 17,2021)

1031 Like-Kind exchanges, often used to “trade” one real estate property to defer capital gains taxes, have many rules. With many moving parts, there are special rules for depreciable properties, a 45-day rule, a 180-day rule, a reverse exchange and various other rules for second properties, vacation homes etc.

What is Like-Kind Real Estate? (The Balance, Oct. 14, 2021)

“Like-kind real estate is a piece of property or land that is similar to another in nature or character. This designation is important to the Internal Revenue Service (IRS) because in most cases when you sell a piece of property or real estate, you will have to pay the capital gains tax. But in some cases, if you sell the property to purchase a second that is enough like the first, you can skip the tax.”

Rules, Forms, & Guidelines From the IRS

The following links provide instructions and tips for IRS tax forms relating to 1031 Like-Kind Exchanges.

What is IRS Form 8824: Like-Kind Exchange (TurboTax, Oct. 1, 2021)

About Form 8824, Like-Kind Exchanges (United States Internal Revenue Service, Mar. 23, 2021)

Like-Kind Exchanges – Real Estate Tax Tips (United States Internal Revenue Service, Feb. 9, 2021)

1031 Exchanges for REALTORS®

1031 Tax Deferred Exchange Safe for Now (Santa Barbara Independent, Nov. 1, 2021)

“Throughout the summer and into the fall, negotiations were being held that would decide the final form of the multi-trillion-dollar economic plan. Politicians spent weeks moving things on and off the table and only over the past week or so did the final framework come together. Members of the House Ways and Means committee sent out letters recently to their constituents letting them know that Section 1031 of the Tax Code was safe. While the bill has yet to be finalized and voted on, we can be assured that the Tax Deferred Exchange is safe, for now at least.”

The 1031 Like-Kind Exchange Is a Key Tool for Investing in Diverse and Inclusive Communities (National Association of REALTORS®, May 6, 2021)

“David Doig, President and CEO of Neighborhood Initiatives developed a national grocery story in the food desert of a Chicago’s Southside Bronzeville neighborhood. The site was formerly the demolished Ida B. Wells Public Housing Complex where it remained a vacant lot for more than 15 years. David’s company developed a Mariano’s grocery store in its place and then a New York investment group purchased the new development through a 1031 like-kind exchange. This outside capital infused a rebirth of jobs, housing, and commerce into the community.”

Like-Kind Exchange Transactions of REALTORS® in 2016-2019 (National Association of REALTORS®, Sep. 4, 2020)

This report, published midway through 2020, details the use of like-kind exchanges among REALTORS® from 2016-2019. It highlights the changes that occurred to the 1031 in with The Tax Cuts and Jobs Act of 2017. According to the report, a “majority of properties that were sold in like-kind exchange were held by small investors and that additional capital was invested in the property acquired nine times out of ten.”

Delaware Statutory Trusts (DSTs)

Delaware Statutory Trust (The Balance, Oct. 22, 2021)

“DST investors may benefit from a professionally managed, potentially institutional-quality property. The underlying property could be a 500-unit apartment building, a 100,000 square-foot medical office property, or a shopping center leased to investment-grade tenants. Most DST investments are assets that your run-of-the-mill, small- to mid-sized accredited investors could not otherwise afford. However, by pooling money with other investors, they can acquire this type of asset.”

What is a Delaware Statutory Trust in a 1031 Like-Kind Exchange (The Motley Fool, Apr. 16, 2021)

Delaware Statutory Trusts, which were created over 30 years ago, are way to take part in a 1031 Exchange without being the sole owner of a property. In some ways, this practice is akin to what we now call “crowdfunding” and is available for both residential and commercial real estate. Once you invest, you are a partial owner of both the equity and the debt.

Preferred Structure: As a Form of Fractional Investment, DSTs Have Become Popular as a Replacement for 1031 Exchanges (Wealth Management Real Estate, Apr. 1, 2021) E

Delaware Statuary Trusts have become increasingly popular in recent months. Lending DST sponsor, Capital Square Realty, has reported that the first three months of 2021 saw a huge increase in DST activity, helping them have their “strongest year ever.” At least part of this success can be ascribed to the growing amount of accredited investors – baby boomers. As baby boomers continue to age into retirement, they often are looking for new properties and passive income, the perfect situation for DSTs.


Guide to 1031 Exchanges: Basics, Resources & Intermediaries (BiggerPockets.com)—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% (eBook)

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

Books, Videos, Research Reports & More

The resources below are available for loan through Member Support. 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 Member Support at 800-874-6500 for assistance.

Building Wealth Through 1031 Exchanges (Exchange Facilitator, LLC, 2006)

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

The Tax-Free Exchange Loophole (Wiley, 2005)

Have an idea for a real estate topic? Send us your suggestions.

The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.


Section 1031 Like-Kind Exchange Resources

Like-Kind Exchange: Member Stories

We need your help to educate lawmakers and their staff about 1031s. It is not a tax loophole for the wealthy; it is a tax tool that has brought immeasurable revenue, jobs, investment, and economic benefit to the U.S.

Like-Kind Exchange: Myth Busters

If 1031 were repealed or limited, it could cause serious harm to the economy or even a collapse of the already reeling commercial real estate industry

Like-Kind Exchange Transactions 2016-2019

This report looks at like-kind exchanges involving members and assesses their views on the economic impacts of the proposed repeal of Section 1031.

Like-Kind Exchange Videos