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With most of the country experiencing a depressed real estate market, you may find it difficult to sell a business building or apartment house. To make matters worse, a sale could result in significant tax consequences for real estate property that has appreciated in value since it was acquired.

Fortunately, there is a way you may be able to avoid dire tax problems. Assuming that a suitable replacement property can be identified, you can arrange an exchange of properties. If the properties are considered “like-kind,” you generally do not have to pay current tax on the exchange.

Basic premise: The rules for like-kind exchanges apply to investment or commercial property. (They cannot be used for residential homes.) This refers to the nature, character or class of the property—not its grade or quality. For example, a swap of an office building for an apartment building of the same value can qualify as a like-kind exchange. As a result, neither party has to report taxable income.

Although other types of property may qualify under the rules, the majority of these transactions involve real estate. However, in the real world, trading real estate properties is usually not so simple.

Suppose you want to acquire real estate, but the owner is not interested in any of the properties that you own. The tax law allows you to take the like-kind exchange concept one step further. The exchange can involve multiple parties if the two owners cannot agree on the properties to be swapped.

Example: Tinker wants to acquire property owned by Evers. However, Tinker does not own any property that Evers desires in return. After discussing a number of locations, the two of them strike a deal with Chance. Evers agrees to take Chance’s property, Chance acquires title to a property owned by Tinker and Tinker obtains the property he wanted all along.

The IRS has approved the use of a qualified intermediary to facilitate the deal, as long as the intermediary is not connected with one of the other parties. Also, be aware that time restrictions are involved in a multiple-party swap. In general, the property you receive must be identified within 45 days of the original transfer, and you must take title within 180 days (or your tax return due date plus any extensions, if that is sooner).

Assuming like-kind properties are involved, the entire transaction may be tax-free if the deal is completed within these time frames. One catch: If you receive any money or property as part of the deal, the additional amount—called “boot”—is subject to income tax. On the other hand, no loss is recognized by the taxpayer who provides the boot. The assumption of a greater mortgage is also treated as taxable boot for this purpose.

Finally, be forewarned that the IRS is often suspicious of these transactions. This is a complex area of the tax law, so professional assistance from your Condley and Company, L.L.P. adviser is a must.