There’s a rule in the tax code that allows you to exchange property you hold for business use or investment for other like-kind property and defer any tax on the gain. This was a popular strategy for business owners who wished to acquire new property without incurring a large tax liability from selling similar property.
For tax years beginning after 2017 and before 2026, the rules for exchanging property have tightened. While you are still permitted to defer tax on the gain by acquiring like property, exchanges are limited to real property only. While you can still exchange unimproved real property for improved property and vice versa, you cannot exchange machinery, equipment or vehicles for like property.