Under IRS regulations,property held for productive use in a trade or business or for investment that is exchanged solely for similar property.Any real estate (except your personal residence) is considered like-kind to any other real estate. Encountered in the context of a 1031 exchange, if you sell a piece of real estate, and then buy another piece within certain strict time limits and following very specific rules,then you will not have to pay income taxes on the first sale. Taxes will be paid when you sell the second property,unless you do another 1031 exchange.In that case,tax payment will be delayed again.See also 1031 exchange.
Example: In real estate, all real estate except one's personal residence(s) is considered “like kind” to all other real estate. City property is “like kind” to farm property; unimproved real estate is “like kind” to improved real estate. On the other hand, shares in a REIT are not considered real estate for the purposes of a like-kind exchange. In addition, a long-term lease of less than 30 years is not considered real estate, and a life estate expected to last less than 30 years is not considered real estate, for purposes of these rules. (For more information, see Publication 544, “Sales and Other Dispositions of Assets,” available at the IRS Web site, www.irs.gov.)