A 1031 Exchange is an Internal Revenue Condition which allows for a tax-deferred exchange with like properties. These exchanges have to occur within a chosen period of time to qualify for the tax benefit. The exchanges are most often associated with real estate but can be done with alternative real property. There are specific rules for individuals or businesses to follow in order receive a tax-deferral for the exchange of property escaping high capital gain or other taxes.  

 1031 Exchange may be performed for either business or personal assets. It may even be done from a business to a person or vice-versa. The exchange refers back to the properties of the asset as being exchanged plus not who is exchanging it.  

The person or entity seeking to carry out a 1031 Exchange has 45 days to complete the exchange. If similar-property has not replaced the initial property, this is considered a sale followed by a buy and can be susceptible to taxes plus not deferred in accord with the Internal Revenue Code Section 1031. This can be extraordinarily tricky when it comes to real estate that can have contingencies that extend escrow.  

Items eligible in 1031 Exchanges are real estate, boats, vehicles plus other tangible assets together with farm animals. To qualify for the tax-deferral, it's imperative [that the] person doing the exchange perceive what's like-kind. A house cannot be exchanged for a boat. Nor can a male cow be exchanged for a female cow since they have different definable economic properties. While they must have the same properties, they will be able to differ in quality or grade. Learn more about 1031 exchange explained here. 

Real estate has to have a particular classification to qualify for a 1031 Exchange. It needs to be for business or investment use. A property that is being exchanged from business use must be exchanged for either business use or investment use but cannot be exchanged for person use or general sale. Thus a rental property may be exchanged for land to be developed.  

Stocks, bonds, plus alternative securities aren't eligible for a 1031 Exchange. Inventory maintained in warehouses is just not eligible either. Additionally, mortgages and different debts may not take any tax-deferred advantage in a 1031 Exchange plus are not eligible items.