If you want to remain in the rental real estate business, but want to unload your property for a different one of similar characteristics, a like-kind exchange may be a possible solution. To keep it simple, a like-kind exchange allows you to swap your property for one that is similar, while deferring taxes on any gain. A real estate broker that specializes in these types of exchanges may be able to help you find a property that meets your objectives.
IMPORTANT NOTE: Before going through with the swap, consult a tax professional and a real estate attorney experienced in this area to ensure that the exchange meets the complicated IRS rules governing the transaction.
SUGGESTION: Like-kind exchanges are reported on IRS Form 8824: Like-Kind Exchanges.