Aircraft owners upgrading from one airplane to another sometimes ask whether a 1031 ‘like-kind exchange’ can defer the tax on the sale. The answer changed significantly with tax reform. This page explains where 1031 exchanges stand for aircraft — but it is general information, not tax advice, and you should confirm your situation with a qualified CPA.
Key takeaways
- 1031 exchanges no longer apply to personal property like aircraft after the 2017 tax law.
- Section 1031 is now limited to real property (real estate).
- Bonus depreciation has become the more relevant tool for business aircraft buyers.
- Always confirm with a CPA — aircraft tax is fact-specific.
What Changed for 1031 and Aircraft
Before the Tax Cuts and Jobs Act of 2017, aircraft (as personal property used in business) could qualify for a 1031 like-kind exchange, deferring gain when you traded one business aircraft for another. That law limited Section 1031 to real property — real estate — for exchanges completed after 2017. As a result, a like-kind exchange generally is no longer available for aircraft. This is a significant change that older articles and advice may not reflect.
What Business Buyers Should Consider Instead
With 1031 off the table for aircraft, the more relevant tax tools for business buyers are depreciation-based. Under the 2025 One Big Beautiful Bill Act, 100% bonus depreciation was made permanent for qualifying property placed in service after January 19, 2025, and Section 179 expensing remains available within its limits. For a qualifying business-use aircraft, these can be powerful — but they're rule-bound and depend on business-use percentage. See our bonus depreciation & Section 179 guide.
Get It Right With a CPA
Aircraft taxation is fact-specific and changes with the law. Whether you're selling one airplane to buy another, structuring a purchase through an entity, or planning around depreciation and recapture, work with a qualified aviation CPA before you rely on any tax treatment. The cost of good advice is small relative to the tax at stake — and relative to the cost of getting it wrong. On the financing side, a broker can structure the loan to fit your tax strategy.
Rates, terms, and figures in this article are illustrative examples for the 2026 market and are not offers of credit. Jaken Aviation is a licensed aircraft financing brokerage — a division of Jaken Finance Group — and does not make loan decisions. All financing is subject to lender approval. Tax information is general and not a substitute for advice from a qualified CPA.
Frequently Asked Questions
Can I do a 1031 exchange on an aircraft?
Generally no. The 2017 Tax Cuts and Jobs Act limited Section 1031 like-kind exchanges to real property (real estate), so aircraft no longer qualify. Confirm your situation with a CPA.
What replaced 1031 for aircraft buyers?
Depreciation-based tools are now more relevant — notably bonus depreciation (made 100% permanent under the 2025 OBBBA for qualifying property) and Section 179 expensing, for qualifying business-use aircraft.
Does this apply to selling one airplane to buy another?
Since like-kind exchange treatment no longer applies to aircraft, a sale is generally a taxable event. Plan the tax with a CPA, and consider how depreciation on the new aircraft fits in.
Is this tax advice?
No — this is general information. Aircraft taxation is fact-specific and changes with the law. Confirm your situation with a qualified aviation CPA.
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