What’s the benefit? A seller can transfer the equity in their current investments into a like-kind property that may have a stronger tenant with more credit, a higher return on investment – or both. The definition of “like-kind,” according to the IRS, means any class of real estate can be exchanged for any other type of real property. The caveat is, property used for personal use does not qualify as like-kind.
The next step is closing on the upleg property(ies). Closing must occur within 180 days of the sale of the downleg property. At least one of the identified properties must be purchased. If the proceeds from the downleg are not all reinvested on the upleg property, then any difference in price is taxable as a capital gain.