What Qualifies as Like-Kind Property in a 1031 Exchange?
A 1031 exchange allows investors in Ohio to defer capital gains taxes by reinvesting proceeds from a property sale into another like-kind property. But what does "like-kind" really mean?
The IRS defines like-kind property broadly for real estate exchanges. As long as both the relinquished and replacement properties are held for investment or business purposes, they qualify—even if they are different types of real estate. The key factor is how the property in Ohio is used, not its specific characteristics.
Types of Like-Kind Properties
Investment and Rental Properties
Residential and commercial rental properties in Ohio—including apartments, office buildings, and retail spaces—qualify for a 1031 exchange if they are held for income-generating purposes.
Raw or Vacant Land
Unimproved land in Ohio can be exchanged for developed land or other investment real estate, as long as it is held for business or investment purposes.
Commercial Real Estate
Warehouses, shopping centers, industrial parks, and mixed-use buildings are eligible for an exchange, provided they are used for business or income generation.
Multi-Family Units
Duplexes, triplexes, and apartment complexes qualify if they are investment properties rather than primary residences.
Agricultural & Farmland
Ranches, farms, and agricultural land held for investment or business use are eligible under 1031 exchange rules.
Retail & Office Spaces
Retail storefronts, office buildings, and professional spaces qualify if they are not used as a primary residence in Ohio.
Industrial Properties
Factories, distribution centers, and manufacturing facilities can be exchanged for other like-kind business properties.
Personal residences, vacation homes in Ohio primarily used for personal enjoyment, and properties held for quick resale (such as flips) do not meet IRS criteria for a 1031 exchange.
Maximize Tax Deferral with a Smart Exchange
Choosing the right replacement property in Ohio is essential for a successful 1031 exchange. Working with experienced professionals ensures compliance and helps you reinvest wisely. Contact us today to learn more about your options and start your exchange with confidence.