Internal Revenue Code Section 1031 allows for the deferral of capital gain tax if property held for productive use in a trade, business or for investment is exchanged for property of “like-kind.”
There are only a few ways to receive special tax treatment on the sale of real estate. One is IRC Section 121 (“primary residence” exemption), for those who qualify and another is IRC Section 1031 tax deferral on the exchange of investment property that qualifies under Section 1031 and the Treasury Regulation guidelines.