What is “Like-Kind Property”?

The tax code defines like-kind as property “similar in nature or character, notwithstanding differences in quality or grade”.  For all intents and purposes this means direct ownership in real estate must be exchanged for direct ownership in real estate. As long as both the property to be sold and the property to be purchased are held for productive use in a trade or business, or for investment purposes, taxpayers may be able to purchase whatever type of property they want.

For example, you could possibly sell your investment property and exchange into a retail property or multi-family housing.