like-kind exchange

A like-kind exchange is a tax-deferral strategy that allows an individual or business to swap one investment property for another similar property without immediately paying taxes on any profit from the sale. This means you can trade, for example, a rental house for an office building and defer capital gains taxes. The properties involved must be used for investment or business purposes, not personal use. This exchange promotes investment growth by allowing reinvestment of profits without the immediate tax burden, making it an attractive option for real estate investors.