Can Replacement Property Be Acquired in any State?

This is actually a very common question because taxpayers are often selling property in one particular state that has "peaked" in its real estate market cycle and they are looking into acquiring property in another state that is currently undervalued.

Generally, the answer is yes. Like-kind property means that property must be held for rental, investment or business use. It does not have to be the same type (i.e. condo for a condo) and it does not have to be located in the same state.

There are a few exceptions, so it is always a good idea to consult with your legal and tax advisors as to state specific laws and regulations.