IRC §1031 states that the relinquished and replacement property must be of “like-kind.” With respect to a 1031 exchange of real estate, all real property is like-kind. As long as the property is being used for investment and income purposes, and not as a primary residence, it can be exchanged. Here are the types of property which the IRC recognizes to be of like-kind in nature:
Single Family Rentals
Some Recreational Properties
Leasehold interest of 30 years or more
Like-Kind Personal Property
As far as like-kind personal property, IRC codes become more restrictive. For example, an automobile can be exchanged for another automobile and manufacturing equipment can be exchanged for different manufacturing equipment. This type of exchange can be used to replace outdated technology or improve machinery.