There is some confusion regarding what type of property qualifies for a §1031 tax deferred exchange. The Internal Revenue Code Section 1031 states that “no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.” “Like-kind” property can include, but is not limited to, any of the following, provided it is held for investment:

    * Single Family Rental
    * Duplex
    * Apartment
    * Commercial Property
    * Raw Land

For example, raw land can be exchanged for a single-family rental, or apartments or a commercial building. Properties can be exchanged anywhere within the United States.  Selling an investment property and trying to do a 1031 exchange to purchase a primary residence does not directly qualify.  Taxpayers can do a 1031 exchange into residential income and then convert it at a later date to their primary residence.