What property qualifies?
IRS instructions for Form 8824 say that for exchanges after 2017, section 1031 applies only to real property held for use in a trade or business or for investment. Real property held primarily for sale does not qualify, and real property in the United States is not like-kind to real property outside the United States. Improved and unimproved real estate can both qualify.
A primary residence does not qualify, nor does property used primarily for personal use. The IRS has specifically warned about promoters pitching exchanges of vacation or second homes that do not qualify.[1][2]
The 45-day and 180-day deadlines
In a deferred exchange, you identify the replacement property in writing within 45 days after transferring the property you sell, describing it clearly, for example by legal description or street address. You must receive it within 180 days after that transfer, or by your return's due date including extensions, whichever comes first.
Taking control of the cash before the exchange is complete may disqualify the whole transaction, which is why exchanges commonly use a qualified intermediary to hold the proceeds. You cannot be your own intermediary, and related parties and certain agents, such as your real estate agent or attorney, are disqualified.[1][2]
Boot, related parties and reporting
If you receive money or other property that is not like-kind, gain is recognized to the extent of that money or property, and net liabilities assumed by the other party count too. The deferred gain carries into the basis of the replacement property and is taxed when that property is eventually sold outside another exchange.
Exchanges with related parties, such as a spouse, parent or sibling, have a 2-year holding rule. You report each exchange on Form 8824 with your return for the year of the transfer, and for related-party exchanges also for the 2 following years. Because the rules are technical, plan the exchange with a CPA or tax attorney before you list the property.[1][3]
Key takeaways
- Since 2018, like-kind exchange treatment applies only to real property held for business or investment.
- Identify replacement property in writing within 45 days and receive it within 180 days (or by your return's due date, if earlier).
- Do not take control of sale proceeds; a qualified intermediary typically holds them.
- Cash or other non-like-kind property received is taxable to that extent.
- Report the exchange on IRS Form 8824 and get tax advice before you sell.
Sources
- [1]IRS — Instructions for Form 8824 (2025), Like-Kind Exchanges
- [2]IRS — Fact Sheet FS-2008-18, Like-Kind Exchanges Under IRC Section 1031
- [3]IRS — About Form 8824, Like-Kind Exchanges
Reviewed October 11, 2026. General real-estate information for Florida, not legal, tax, lending or insurance advice. Laws, rates and deadlines change — confirm property-specific facts with the agency cited, a Florida real-estate attorney, CPA or licensed insurance agent.