The Like-Kind Property Rule
IRC §1031 allows you to exchange one investment property for another investment property. When you exchange real estate, you can exchange different types of investment property (e.g., you can exchange an apartment building for a shopping mall or vacant land for an office complex), but you cannot include your personal residence in a §1031 exchange.

The Equal or Greater Value Rule
In order to defer all capital gains tax, the replacement property (your new property) should be of equal or greater value than the relinquished property (your original property).

The Equal or Greater Debt Rule
Generally the debt, or mortgage, on your replacement property should equal or exceed the debt on your relinquished property. But, you can opt to carry less debt on a replacement property if you add cash from other sources (e.g., personal savings).

The Same Owner Rule The taxpayer who sells the relinquished property must be the same taxpayer who acquires the replacement property. For the independent investor this is a simple dictum. However, for a multimember LLC this issue can become considerably more complex.

The Timing Rules To make a valid exchange you must:

• Identify your replacement property within 45 days of the sale of your relinquished property1In a reverse exchange, you must identify the property you wish to relinquish within 45 days of closing on a replacement property , and
• Complete the entire exchange process by the earlier of−
       The date your tax return is due, or
      180 days after the sale of your relinquished property.
  
  If your tax return is due before the 180-day period is over,
  you can extend the exchange period by filing for an extension of your tax due date.

The Rules of Constructive Receipt
The issue of constructive receipt is crucial to the success of your exchange. If you are in constructive receipt of all or a portion of the proceeds from the sale of your relinquished property, those proceeds are taxable — defeating the whole purpose of the exchange.