replacement property

A replacement property is a new asset acquired to continue or improve a business or investment purpose after another asset is sold or exchanged. In tax terms, it's often used in the context of a 1031 exchange, where the goal is to defer capital gains taxes by reinvesting the proceeds from the sale of an investment property into a similar one. Essentially, it’s the new property that takes the place of the original, allowing the investor to maintain their investment position without immediate tax consequences.