What kind of property can be lawfully exchanged?
Avoidance of tax demands that the owner trade for property that is like-kind. Fortunately all interests in real estate are considered to be like in kind to any other whether improved or not. For example, the following types of real property are considered to be of like-kind: • A single family house for a duplex • Unimproved land for commercial income property • Ranch or farmland for city condominiums • A lease of 30 years or more for a fee interest • A co-tenancy interest for sole ownership in realty • A conservation easement for a fee interest in an apartment building But, U.S. realty is not permissibly traded for foreign realty. In dealing with personal property (equipment, office furniture) the IRS has published detailed guidelines for determining whether these exchanges involve like-kind property. In general, the focus and categories of permitted trades are more narrowly drawn than in real estate.
