I currently own a rental property but would like to sell due to a number of factors with the property. I have been searching for a replacement property but there is not much for sale presently.

I would like to do a 1031 exchange to avoid paying taxes on the sale of the property. If I am not able to find a replacement rental property in the allotted time, would buying the stock of a REIT qualify as a 'Like-Kind' exchange? Do I have to replace my real property with real property that I own? What options, outside of paying the taxes, are available as a temporary measure until I find a good replacement property?

I realize that I could wait to list my current property until I make an offer on another property, but I have no guarantee that my property will sell within an acceptable time frame to a seller.


Found this on irs.gov, but I was not sure if it meant stocks are exempt when trading stocks or completely exempt as not eligible under any circumstance.

Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of:

  • Inventory or stock in trade
  • Stocks, bonds, or notes
  • Other securities or debt
  • Partnership interests
  • Certificates of trust
  • As an answer to my second question, I talked with the bank and they offer bridge loans which are short term (3-6 month) interest only loans for just this situation. Commented Mar 26, 2017 at 13:41

2 Answers 2


would buying the stock of a REIT qualify as a 'Like-Kind' exchange?

Short answer, no.

Long answer, a 1031 (Starker) exchange only applies to real estate. From the Wikipedia page on the topic:

To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business, or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, although securitized properties are not excluded.

A REIT, being stock in a real estate company, is excluded from Section 1031.


Some people think that if you sell a house, you must buy a similar house to do a 1031 exchange. This is a myth. In fact, the rules around what is “like kind” are pretty loose.

You can sell a house and buy a gas station, apartment complex, or even a piece of land. What you can’t do is sell a house and buy stock, bonds, a piece of art, or collectible figurines.

I hope it's clear now.

  • 1
    Unfortunately, this doesn't make it clear, at least not from the POV that the question is coming from. The question is implicitly thinking that a REIT is like-kind because it involves real estate. It would be better if you make it clear that investing in a REIT, specifically, is not directly owning real property, and thus does not qualify for a 1031 exchange with real property.
    – Makyen
    Commented Dec 8, 2018 at 16:39
  • Also, while the link you provided looks like it's actually a good resource about 1031 exchanges, it's not clear if you're associated with that site. If you are associated, then Stack Exchange requires that affiliation to be disclosed in your answer or question. Given that you were linking to a site that was inherently commercial, it's also a good idea to disclose that you have no affiliation, if that's the case. This is particularly true due to the nature of real estate agent advertising. There may also be various real estate based laws or agreements that might require you to disclose.
    – Makyen
    Commented Dec 8, 2018 at 16:51

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