The Tax Cuts and Jobs Act (TCJA) limited the ability of taxpayers to engage in a tax-deferred exchange (1031 exchange) in property held for investment or business use. The TCJA removed the ability to engage in a 1031 exchange for any property other than real property. Gone are the days of a tax-deferred trade of equipment, vehicles, or other tangible personal property used in a trade or business. But now we need a better definition of what constitutes real estate for this purpose.
Prior regulations mainly focused on the determination of whether property was of “like-kind” instead of whether it was actually “real estate.” Local law was also considered as a determining factor. The authors of the TCJA made it clear that the ability of real estate to be exchanged in a 1031 exchange should be unchanged, so a clear definition of what constitutes “real estate” for this purpose is