To qualify as a tax-deferred exchange, a property must be

• A. Held for productive use in trade or business
• B. Have a rental property for 6 months
• C. Owner-occupied as primary residence
• D. Appraised value above a threshold

Answer: (A)

Tax-deferred exchanges hinge on how the property is used. To qualify, the property must be held for investment or for use in a trade or business, not for personal use. That means the asset is owned to generate income or to support business activity, such as a rental building or an office/commercial property used in operations. An owner-occupied home does not qualify because its purpose is personal residence, not income production. Simply having a rental for a short period isn’t the determining factor; what matters is that the property is held for investment or business use, not for sale as inventory or for personal living. Appraised value has no bearing on eligibility—the tax-deferred status depends on the property's use, not its price.