Like-kind property in 1031 context means any U.S. real property held for investment or business use. Much broader than the name suggests — LA multifamily can exchange for an out-of-state net-lease retail property, Montana ranch, or DST interest.
The "like-kind" standard for real estate under IRC 1031 is permissive: any investment real property qualifies. Residential rental, commercial, industrial, raw land, net-lease — all like-kind to each other. Only personal residences and inventory-type property (dealer property) are excluded.
LA multifamily 1031 exchangers routinely replace with dramatically different property types: DSTs for passive income, out-of-state multifamily for higher cap rates, net-lease retail for credit-tenant income. Like-kind flexibility is one of the 1031's most valuable features.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
Thinking about selling? Get a no-obligation evaluation from a broker with $1.41 billion across 254 closed LA multifamily transactions.
Request Free Evaluation →