Approved 1031 Exchange Replacement Options

You can 1031-exchange into any U.S. real property held for investment or business use which opens up far more options than most investors realize. Beyond buying another rental, you can exchange into passive, income-producing structures like triple-net leases, Delaware Statutory Trusts, and tenants-in-common interests, or even trade into a REIT through an UPREIT. This page is your map to every approved replacement option, and who each one suits best.

What qualifies as replacement property in a 1031 exchange?

Any “like-kind” real property held for investment or business use qualifies. In a 1031 exchange, “like-kind” is broad you are not limited to swapping the same type of property. You can exchange an apartment building for a retail center, raw land for a rental, or a single property for a fractional interest in a larger one. The requirements are that both properties are U.S. real estate and held for investment or business (not a primary residence or property held mainly to flip).

That flexibility is why the options below all qualify.

What are the replacement property options? (at a glance)

Can you 1031 exchange into a rental or commercial property?

Yes direct investment real estate is the most common replacement option. You can exchange into residential rentals, multifamily, retail, office, industrial, or mixed-use in any state. This suits investors who want direct ownership and control and are comfortable with active management.

Can you 1031 exchange into a triple-net (NNN) lease property?

Yes. A triple-net lease property is a single-tenant building where the tenant pays taxes, insurance, and maintenance giving the owner passive, predictable income with minimal management. It’s a popular choice for investors who want to stay in direct real estate but step back from day-to-day landlord duties.

Can you 1031 exchange into a Delaware Statutory Trust (DST)?

Yes. A Delaware Statutory Trust (DST) lets you own a fractional, fully passive interest in institutional-grade real estate. It’s often used to diversify across multiple properties, or as a backup option to make sure exchange proceeds are fully invested before the 45-day deadline.

Read our full guide to Delaware Statutory Trusts →

Can you 1031 exchange into a tenants-in-common (TIC) interest?

Yes. A tenants-in-common (TIC) structure lets multiple investors co-own a single property, each holding a direct, deeded fractional interest that qualifies for 1031 treatment. TIC interests give you a share of a larger asset than you could buy alone, with a more direct ownership stake than a DST.

Can you 1031 exchange into a REIT? (the UPREIT / 721 exchange)

Not directly but through a two-step UPREIT structure you can. You 1031 into a DST, then later contribute that interest to a REIT’s operating partnership under Section 721 in exchange for operating partnership (OP) units. This lets you trade real estate for a diversified, professionally managed REIT position though it’s a one-way move (you generally can’t 1031 out afterward).

How do you choose the right replacement option?

It comes down to how active you want to be and your goals:

• Want control? → direct investment real estate or improvement exchanges.
• Want passive income? → NNN leases or DSTs.
• Want diversification? → DSTs or TICs across multiple properties.
• Want out of real estate management entirely? → UPREIT/721 into a REIT.
• Have leftover proceeds to place before the 45-day deadline? → a DST makes a reliable backup.

A 1031X exchange officer can help you match the option to your goals and coordinate the exchange either way.

Not sure which replacement option fits your exchange?

Every investor’s goals are different. Talk to a 1031X exchange officer about your options forward, reverse, DST, or a mix at no cost.

Part of our 1031 Investor Center — your complete guide to 1031 exchanges.