Real-estate trading (also referred to as permanent real-estate swapping), is a type of “I-buy-yours-you-buy-mine” arrangement. It is distinct from vacation-home swapping.
The deteriorating real-estate market (circa 2006) has led many to realize that trading may be an extremely viable approach to selling one’s real estate. This approach only works if the seller is also looking to buy another property, such as a move or relocation. But it is possible to move up or down in price, size, etc., or even trade to another city or state entirely.
Real estate trades fall under the 1031 exchange tax loophole. 1031 exchanges are a way to defer capital-gains tax on investment properties. 1031 exchanges do need to involve an actual trade of real estate between two parties.