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Guides
What qualifies as like-kind real property after the 2017 tax law changes, and how Orange County investors can exchange across property types.
Since the Tax Cuts and Jobs Act took effect in 2018, like-kind exchange treatment under Section 1031 applies only to real property held for investment or use in a trade or business. Personal property, including equipment, vehicles, and aircraft, no longer qualifies for exchange treatment. Understanding this distinction matters most for Orange County investors who previously exchanged business equipment alongside real property and can no longer do so.
Real property is broadly like-kind to other real property, regardless of grade or quality. An investor can exchange raw land for a retail center, an apartment building for an industrial property, or a single tenant net lease building for a multifamily property, as long as both properties are held for investment or business use rather than personal use. A primary residence or a vacation home used personally does not qualify, even though it is real property.
Orange County investors commonly exchange across property types, moving between office, industrial, retail, multifamily, and net lease assets located in Irvine, Anaheim, Santa Ana, and out of state markets. Both the relinquished and replacement property must be located within the United States to qualify as like-kind. Foreign real property is not like-kind to property located in the United States, so investors considering an overseas replacement property should confirm eligibility before relying on Section 1031 for deferral.
What Is Included
- Like-kind eligibility review for relinquished and replacement property
- Property type analysis across office, industrial, retail, multifamily, and net lease assets
- Investment versus personal use qualification review
- Coordination on exchanges crossing property types and geographic markets
- Documentation support confirming business or investment use history
- Coordination with CPA on property use qualification questions
- Review of held for investment holding period considerations
- Guidance on United States property location requirements
Common Situations
- Orange County investor exchanging one property type into a different property type for diversification
- Investor uncertain whether a mixed use or partially personal use property qualifies
- Investor considering an out of state replacement property and confirming like-kind eligibility
Frequently Asked Questions
Does personal property still qualify for 1031 exchange treatment?
No, since the 2018 tax law changes, only real property qualifies for like-kind exchange treatment.
Can an investor exchange raw land for a commercial building?
Yes, all real property held for investment or business use is considered like-kind to other such real property.
Can a primary residence be exchanged under Section 1031?
No, property used primarily for personal purposes does not qualify for like-kind exchange treatment.
Can Orange County investors exchange into property in another state?
Yes, real property located anywhere in the United States is like-kind to real property in any other state.
Does property grade or quality affect like-kind status?
No, real property of any grade or quality is like-kind to other real property under current law.
Does foreign real property qualify for exchange with United States property?
No, foreign real property is not like-kind to real property located in the United States.
Example of the type of engagement we can handle
Example Capability
Service type:
Like Kind Property Eligibility Review
Location:
Orange County, CA
Scope:
Confirm like-kind eligibility for an investor exchanging Anaheim raw land into a multi-state industrial portfolio
Client situation:
Investor holding vacant Anaheim land for investment wanted to exchange into industrial properties located in two other states
Our approach:
Reviewed investment use history of the relinquished land, confirmed like-kind eligibility of the industrial replacement properties, verified United States property location requirements
Expected outcome:
Investor confirmed like-kind eligibility across property types and states before proceeding with identification
Contact us to discuss your situation in Orange County, CA. We can share references upon request.
Educational content only. Not tax, legal, or investment advice.
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Identification rules
Three Property Rule
Identify up to three candidate properties anywhere in the United States, regardless of value, within 45 days.
Two Hundred Percent Rule
Name more than three properties as long as the combined value stays within 200 percent of the relinquished sale price.
Ninety Five Percent Rule
If you exceed those limits, acquire at least 95 percent of the total value identified to keep the exchange compliant.
Identification letter helper
Identification Letter 7/21/2026 Qualified Intermediary, Please accept this written identification for my pending Section 1031 exchange in Newport Beach, CA. Replacement properties: 1) ____________________ 2) ____________________ 3) ____________________ I confirm these properties meet the like-kind and value requirements as of today. Signature ____________________
Timeline tracker
Day 0
Close relinquished property in Newport Beach, CA.
Day 15
Secure intermediary receipts and wire instructions.
Day 30
Begin physical and financial due diligence on preferred assets.
Day 45
Submit identification letter with up to three properties.
Day 90
Lock financing, finalize PSA adjustments, order closing docs.
Day 180
Complete closing with escrow and intermediary coordination.
Kick off Like Kind Property Explained today.
Share your timeline and we will deliver compliant identification support within one business day.