A 1031 exchange is named for a section of the tax code that lets owners who sell business or rental property defer their capital gains tax if they exchange it for a "like kind" property within 180 days of the sale. The owners must identify up to three replacement properties within 45 days of the sale.

Like-kind is defined very broadly. Most types of real estate fall into the same asset category and can be exchanged for each other. For example, you could replace an apartment building with land or a commercial building, but not for equipment.

You cannot replace property in the United States with property outside the country.

Personal property, such as a primary home or vacation home, does not qualify for a 1031 exchange. If a vacation home is rented part of the time, it must pass a use test every year to qualify for 1031 exchange.

For more information, see http://www.realtor.org/libweb.nsf/pages/fg408 and www.irs.gov.