There is a potential IRS issue that has not been addressed [definitively] with 1031's and cost segregation studies. The goal of the cost seg is to apportion as much to quicker depreciation items like 5 and 7 year property. But 1031's are only allowed for real estate exchanges. 5 and 7 year property is not real estate but tangible personal property in most cases. If that's the case, do these categories still qualify as a real estate 1031?  This came from a 1031 class I took. The instructor felt that it was part of the real estate so it should qualify but also noted the IRS could rule otherwise under audit.  Makes you wonder.......