According to the IRS, like-kind properties are those used for similar investment or business purposes, regardless of their specific type or condition. In a 1031 flow, both the property you’re selling and the one you’re buying must be held for investment or business use, such as rental homes, vacant land, or commercial real estate.

They don’t need to be identical in zoning or category—for example, exchanging land for a rental property is allowed. The important factor is that both properties are for investment, not personal use.
Keep in mind, personal homes and properties intended for quick resale typically don’t qualify. It’s recommended to own the property for at least a year before initiating a 1031 flow.

1031 flows are time-sensitive. From your sale’s closing, you get 45 days to pick replacement properties and 180 days to close. Missing these deadlines cancels the flow.

With a 1031 flow, taxes are put off, not forgiven. When you sell, you defer taxes, but selling the new property without another flow triggers the tax bill. Keep reinvesting through flows, and you could delay taxes indefinitely.

A Qualified Intermediary (QI) plays a key role in a 1031 property flow by facilitating the transaction in a way that
complies with IRS rules. The QI holds the proceeds from the sale of the original property and uses them to purchase the replacement property on behalf of the investor. This ensures that the investor never takes direct control of the funds, which is crucial for maintaining the tax-deferred status of the flow.

Look for a QI with a proven track record, proper fund security practices, and excellent client support. Avoid anyone who can’t clearly explain the process or timeline.

You can’t use anyone with a close personal or business relationship as your QI. That includes your CPA, attorney, or real estate agent if they’ve represented you in the last two years.

Rental homes, commercial buildings, land, or other investment properties typically qualify—as long as they’re not used primarily for personal purposes.

No, you cannot. Under IRS rules, 1031 flows must be between properties located within the United States.

A property held outside the U.S. is not considered “like-kind” to U.S. real estate for 1031 purposes, so you cannot trade foreign property for domestic property—or vice versa—using this tax-deferral strategy.

Yes, through a reverse 1031 flow. This lets you buy first and sell later, but the process is stricter, and you’ll need a
special entity to temporarily hold the new property so you don’t violate IRS rules. Sell it. However, during this time, the IRS requires that you do not hold title to both properties simultaneously.

When you sell an investment property for more than you bought it, the profit is considered a capital gain. That gain is taxed by the IRS—unless you defer it using tools like a 1031 flow.

No, you can use a 1031 flow as many times as you want. Each time you reinvest in a like-kind property, you defer your capital gains taxes.