--- title: "Do Options Qualify as \"Real Property\" Under Section 1031?" description: The 1031 exchange landscape in 2025 was defined less by sweeping change and more by reinforced stability—with a few meaningful developments that tightened compliance and strengthened the broader real estate investment environment. What's in store for 2026? Read on. --- [Skip to content](https://blog.visitcss.com/insights/do-options-qualify-as-real-property-under-section-1031#main-content) [![](https://blog.visitcss.com/hubfs/raw_assets/public/css_202104_theme/images/CSS-header-logo.svg)](https://visitcss.com) [![Contact Us](https://no-cache.hubspot.com/cta/default/2907556/728febd9-0165-4532-a7d4-844954edc6af.png)](https://cta-redirect.hubspot.com/cta/redirect/2907556/728febd9-0165-4532-a7d4-844954edc6af) # Do Options Qualify as "Real Property" Under Section 1031? by [Maura Snabes | SVP, Corporate Counsel](https://blog.visitcss.com/insights/author/maura-snabes) January 22, 2026 [Share](https://www.linkedin.com/shareArticle?url=https%3A%2F%2Fblog.visitcss.com%2Finsights%2Fdo-options-qualify-as-real-property-under-section-1031&title=Do+Options+Qualify+as+%22Real+Property%22+Under+Section+1031%3F) [Tweet](https://twitter.com/intent/tweet?url=https%3A%2F%2Fblog.visitcss.com%2Finsights%2Fdo-options-qualify-as-real-property-under-section-1031&text=Do+Options+Qualify+as+%22Real+Property%22+Under+Section+1031%3F) Print **Do Options Qualify as “Real Property” Under Section 1031?** by Maura Snabes, Esq., CES, NTP Jan. 2026   Yes—in the right circumstances, an option to acquire real estate can qualify as “real property” for purposes of a Section 1031 like-kind exchange. Under the final Section 1031 regulations issued November 23, 2020 (T.D. 9935), the IRS formally clarified that certain intangible rights tied directly to real estate are treated as real property. Specifically, Treas. Reg. §1.1031(a)-3(a)(5) explicitly includes “an option to acquire real property” among the intangible assets that qualify—alongside leaseholds, easements, land development rights, and similar real estate interests. **Key Requirements for a 1031-Eligible Option** To qualify, the option must meet the same foundational standards as other 1031 property, including: - **Held for Investment or Business Use** The option must be held for productive use in a trade or business or for investment (the “qualified use” requirement). - **Capital Asset or Section 1231 Property** For the option to be treated as real property under 1031, it must be a capital asset in the hands of the option holder (or qualify as Section 1231 property when held for business use). - **Not Dealer Property / Not Held Primarily for Sale** If the option is held by a dealer or primarily for resale (inventory), it generally does not qualify. **How Options Can Be Used in Like-Kind Exchanges** It is generally agreed that an option can be real property under the regulations, it may be exchanged for: - another option right, - fee title to traditional real estate, or - other real property rights, such as 30+ year leaseholds, timber rights, mineral rights as long as both the relinquished and replacement rights are held for investment or business purposes. However, a taxpayer should always consult with its/their CPA on whether such property will qualify for 1031 purposes. **Practical Considerations** While options are included in the definition of real property, facts and circumstances still matter. For example, the IRS evaluates the nature, duration, and security of the right—meaning a long-term enforceable property right is more likely to be treated as real property than a short-term or revocable permit-type interest. **Bottom Line** An option to acquire real property *can* qualify under Section 1031, but only when it functions as a legitimate investment or business-use interest in real estate. And, again, a taxpayer should **always** consult with its/their CPA on whether its/their property will qualify for 1031 purposes.         .                                                                                                                           ![](https://blog.visitcss.com/hs-fs/hubfs/mo%208-JPG-1.jpeg?width=160&height=185&name=mo%208-JPG-1.jpeg)Maura is a licensed attorney and a Certified Exchange Specialist. She is a founder of Corporate Exchange Services (CXS), established in 1995.  CXS is a member of the Federation of Exchange Accommodators (FEA), the industry's leading professional trade organization.  [More by this author »](https://blog.visitcss.com/insights/author/maura-snabes)   Corporate Exchange Services handles forward, reverse, and improvement exchanges throughout the U.S. Regardless of the transaction complexity, CXS has the expertise and personal approach needed to successfully complete even the most complex 1031 exchange. Contact [msnabes@corp1031.com](mailto:msnabes@corp103.com) to get started [![New call-to-action](https://no-cache.hubspot.com/cta/default/2907556/514a436f-82ea-4fc1-8967-62e07f54da1e.png)](https://cta-redirect.hubspot.com/cta/redirect/2907556/514a436f-82ea-4fc1-8967-62e07f54da1e) --- ![](https://blog.visitcss.com/hubfs/Picture3.png) ### Maura Snabes | SVP, Corporate Counsel Maura practices in the area of Real Estate and Corporate Law. Maura has been the corporate legal counsel for a title company since 1994 and has been with Corporate Settlement Solutions since 2002, as the underwriting and claims counsel. [More by this author](https://blog.visitcss.com/insights/author/maura-snabes) --- Corporate Settlement Solutions (CSS) is a single-source provider of real estate title, closing, valuation, flood, and recording solutions. Our team is highly engaged in delivering results that make our customers more efficient, effective, and profitable. Contact [sales@visitcss](mailto:sales@visitcss) to get started! --- ## Related Articles ### [2025: A Year in Retrospect — and What’s Ahead in 2026 for 1031 Exchanges](https://blog.visitcss.com/insights/2025-a-year-in-retrospect-and-whats-ahead-in-2026-for-1031-exchanges) **2025: A Year in Retrospect — and What’s Ahead in 2026 for 1031 Exchanges** by Maura Snabes... [Read More](https://blog.visitcss.com/insights/2025-a-year-in-retrospect-and-whats-ahead-in-2026-for-1031-exchanges) ### [What's Ahead for the Commercial Real Estate and 1031 Markets in Late 2025?](https://blog.visitcss.com/insights/whats-ahead-for-the-commercial-real-estate-and-1031-markets-in-late-2025) **What’s Ahead for the Commercial Real Estate & 1031 Exchange Markets in Late 2025?** by Maura... [Read More](https://blog.visitcss.com/insights/whats-ahead-for-the-commercial-real-estate-and-1031-markets-in-late-2025) [![TC updateArtboard 1-100-1](https://blog.visitcss.com/hs-fs/hubfs/Artboard%202Shake.png?width=352&name=Artboard%202Shake.png)](https://blog.visitcss.com/insights/the-top-6-commercial-loan-policy-endorsements-to-protect-a-lender) ### [The Top 6 Commercial Loan Policy Endorsements to Protect a Lender](https://blog.visitcss.com/insights/the-top-6-commercial-loan-policy-endorsements-to-protect-a-lender) # The Top 6 Commercial Loan Policy Endorsements to Protect a Lender by Maura Snabes, SVP,... [Read More](https://blog.visitcss.com/insights/the-top-6-commercial-loan-policy-endorsements-to-protect-a-lender) ## Get CSS insights in your inbox Our free newsletter covering the top industry headlines [![Subscribe](https://no-cache.hubspot.com/cta/default/2907556/a3bc0d6c-1091-45b1-b49c-38c8a0c8869c.png)](https://cta-redirect.hubspot.com/cta/redirect/2907556/a3bc0d6c-1091-45b1-b49c-38c8a0c8869c) ### Solutions - [Centralized Title](https://www.visitcss.com/lender-solutions/title-and-closing) - [Home Equity](https://www.visitcss.com/home-equity) - [Commercial](https://www.visitcss.com/lender-solutions/commercial) - [Appraisals](https://www.visitcss.com/lender-solutions/appraisal-management-1) - [eClosing](https://www.visitcss.com/lender-solutions/eclosing) ### Company - [About Us](https://www.visitcss.com/about-us) - [Our Network](https://www.visitcss.com/join-our-network) - [News Releases](https://blog.visitcss.com/news-releases) - [MI Branches](https://www.visitcss.com/company/michigan) - [Careers](https://www.visitcss.com/join-our-team) ### Privacy - [Terms of Use](https://www.visitcss.com/privacy/terms-use) - [Privacy Policy](https://www.visitcss.com/privacy/privacy-policy) ### Contact [![icon phone](https://blog.visitcss.com/hs-fs/hubfs/raw_assets/public/css_202104_theme/images/icon_phone.png?width=24&height=24&name=icon_phone.png)(888) 477-6920](tel:(888)%20477-6920) [![icon mail](https://blog.visitcss.com/hs-fs/hubfs/raw_assets/public/css_202104_theme/images/icon_mail.png?width=24&height=24&name=icon_mail.png)hello@visitcss.com](mailto:hello@visitcss.com) ### Want to join our network? We are always seeking experienced, quality abstractors and appraisers to add to our network. [Learn More](https://www.visitcss.com/join-our-network) [![](https://blog.visitcss.com/hubfs/Logos/CSS-logo-white.svg)](https://www.visitcss.com/) © Copyright 2021 Corporate Settlement Solutions - [![](https://blog.visitcss.com/hubfs/social-media-icons/LinkedIn-white.svg)](https://www.linkedin.com/company/1880473/admin/) - [![](https://blog.visitcss.com/hubfs/social-media-icons/Facebook-white.svg)](https://www.facebook.com/CorporateSettlementSolutions/) - [![](https://blog.visitcss.com/hubfs/social-media-icons/Twitter-white.svg)](https://twitter.com/CSSTitleExperts) - [![](https://blog.visitcss.com/hubfs/social-media-icons/Youtube-white.svg)](https://www.youtube.com/user/CSSTitleExperts) © Copyright 2021 Corporate Settlement Solutions