What is Real Property?

ˈReal Property rē(-ə)l: adjective / ˈprä-pər-tē: noun

  1. land, and anything growing on, affixed to, or built upon it.
  2. property that doesn’t move, or that is attached to the land, which can include man-made buildings and crops.
  3. anything that is permanently located within or under the land, including oil, gases, and minerals found under the land.

Legally, the terms “real estate” and “real property” can be used interchangeably.

Is my Real Property eligible for a “like-kind” exchange?

For real property transactions (rental houses, farmland, office buildings, commercial land, etc.) the “like-kind” requirement does not mean selling and buying the exact same type of property. The term “like-kind” refers to the nature or character of the property, not its grade or quality. For this reason nearly all real property is like-kind to each other.

The IRS is actually very broad scoped in the case of real property like-kindness. The regulations state that “all real property is like-kind to all real property”. Therefore, if you are selling a real property interest (real property to which you have a fee title) you can look for any kind of real property as a replacement property.