What is a Like-Kind Exchange?

Authorized by the Internal Revenue Code 1031 a like-kind exchange or tax-deferred exchange is simply


on the transaction.  In an ordinary sale transaction, the property owner is taxed on any gain realized by the sale of the property.  By employing the like-kind exchange the deferral of taxes can continue through a number of exchanges, until the newly acquired property is sold or until the tax burden is extinguished by death of the owner.

It is important that you work with a qualified intermediary--such as Mutual-exchange, LLC--to assure that the transaction is structured as an exchange of one property for another, rather than a taxable sale of one property and the purchase of another.