Even if you are not a tax professional, many people have heard of a 1031 exchange or like-kind exchange. This tax deferral provision has been a permanent part of the Internal Revenue Code for a long time. Usually, if a taxpayer swaps an asset for another asset it is usually a taxable sale. However, if the exchange comes within Section 1031, then it can generate no tax or limited tax due. Essentially, a taxpayer can change their investment without, according to the IRS, cashing out or recognizing capital gain.