What do the terms 1031 exchange and like-kind exchange refer to?
Internal Revenue Tax Code Section 1031 allows taxpayers to defer income tax on capital gain realized from the sale of investment property (relinquished property) held by the taxpayer for investment or productive use in a trade or business by reinvesting the proceeds in another property of like kind (replacement property). A 1031 exchange is possible only when you sell real estate held for investment purposes; such an exchange does not apply to the sale of your personal residence.
