Selling a home and using the proceeds to buy another raises a tax question that needs to be separated from an investment-property exchange. The property's use is central to deciding which rules apply.
Which property Section 1031 covers
No. The IRS instructions for the form that reports these exchanges say section 1031 does not apply to your exchange of real property if the property you gave up was used solely as your personal residence at the time of the exchange. A different rule covers the house you live in, and it is the main home exclusion, not an exchange.
What section 1031 actually covers
The instructions put the general rule plainly: generally, if you exchange business or investment real property solely for business or investment real property of a like kind, section 1031 provides that no gain or loss is recognized. They also narrow it by date. For 2018 and later years, section 1031 like-kind exchange treatment applies only to exchanges of real property held for use in a trade or business or for investment.
Before that, other kinds of property could qualify. They no longer do.
Two more exclusions sit in the same place. Section 1031 does not apply to exchanges of real property held primarily for sale. And the personal residence sentence above. So a rental house, a commercial building and farm ground are the kind of thing the rule is for.
The house you have lived in is not.
Why owners over 60 ask this one more than anyone
Because they are the owners most likely to have both. A long-time Indiana homeowner who also kept a rental, or inherited farm ground, or bought a second property years ago, is holding two different tax questions that feel like one. The house follows the main home rules.
The rental or the ground is where an exchange can be on the table. Keeping them separate in your own head is most of the work before you ever call anyone.
The two clocks, as the instructions state them
An exchange where you do not swap deeds on the same day runs on two deadlines. The first is identification: no later than 45 days after the date you transferred the property you gave up, you have to get the signed identification document to the person required to transfer the replacement property to you. The second is receipt: the property must be received by the earlier of the 180th day after the date you transferred the property given up, or the due date, including extensions, of your tax return for the year in which you transferred it.
The 180 days is not a floor. A sale late in the year can run into the return due date first and shorten the window.
It gets reported either way
The instructions say that if during the current tax year you transferred property to another party in a like-kind exchange, you must file Form 8824 with your tax return for that year. Deferred is not invisible. The gain is carried, not erased, and the paperwork says so.
What this means for the house itself
If the property you are selling is your home, the question to ask is not how to exchange it. It is what the main home exclusion covers for you, which is a question with its own two year tests and its own arithmetic. The note on the gain when you sell your house sets out what the IRS says about that.
A tax deferral means continuing with another qualifying investment. Consider that ownership decision alongside the tax calculation, rather than treating the deferral as the only objective.
Whether a specific property is held for investment, whether an exchange works for you, how a qualified intermediary is chosen and what the Indiana side looks like all belong to your CPA and to a tax attorney. Timing a 45 day clock against a closing date is a question I will help you think about on the real estate side, but the tax determination is not mine.
The notes on the gain when you sell your house and on selling first or buying first cover the decisions around this one, and the sellers page sets out how a listing is prepared.
Source: Internal Revenue Service, 2025 Instructions for Form 8824, Like-Kind Exchanges, page last reviewed April 30, 2026. Read at source, October 6, 2026.
This note is general. It is not tax or legal advice. Whether section 1031 applies to any property you own depends on facts only your CPA or tax attorney can assess.