What Qualifies as 'Real Property' for Tax-Deferred Section 1031 Like-Kind Exchanges

摘要

Internal Revenue Code Section 1031 provides for tax-deferred exchange of like-kind property in certain circumstances. The tax code places a number of requirements on transactions in order to be considered a qualified Section 1031 exchange. The 2017 Tax Cuts and Jobs Act (TCJA) eliminated the application of the like-kind exchange treatment to property that is non-real estate, providing that such treatment is limited to "real property." In 2020, the US Treasury Department and Internal Revenue Service issued final regulations relating to the provisions of Section 1031 under TCJA. This article examines what qualifies as "real property" that is eligible for tax deferral for purposes of Section 1031 under the final regulations.