Can section 1033 replacement property be anywhere in the country?

Both replacement tests look at the property and the owner, never at the map

Section 1033(a)(2)(A) requires only that you purchase "other property similar or related in service or use to the property so converted" within the replacement period. For an owner-investor, Publication 544 reads that as whether the replacement has "the same relationship of services or uses to you as the property it replaces", judged by the service each property renders to you, the business risks, and "what the properties demand of you in the way of management, service, and relations to your tenants". A net-leased retail building in Ohio replacing a net-leased retail building taken in Florida satisfies each factor.

For real property held for business or investment that was condemned or sold under threat, section 1033(g)(1) replaces that test with like kind, and Reg. section 1.1033(g)-1(a) says the principles of Reg. section 1.1031(a)-1(b) decide whether the replacement is of like kind. That regulation speaks of nature or character and says "one kind or class of property may not... be exchanged for property of a different kind or class"; its examples swap city real estate for a farm and improved for unimproved land. Geography is not mentioned.

Publication 547 makes the point explicitly for the disaster rule in section 1033(h)(2): "the replacement property doesn't have to be located in the federally declared disaster area". Nothing in section 1033 treats condemnations more strictly than disasters on that question. The replacement property rules and timeline page covers the standards in detail.

The one geographic line in the Code is between the United States and everywhere else

Section 1031(h) provides that "real property located in the United States and real property located outside the United States are not property of a like kind". That sentence governs the like-kind standard section 1033(g) borrows, but section 1033(g) imports the standard through the regulation's reference to Reg. section 1.1031(a)-1(b), and no source opened for this page states whether the statutory foreign-property rule travels with it. An owner wanting to replace a condemned US building with property abroad therefore has a question for tax counsel, not a settled answer.

The similar-use test has no such line at all, so a casualty replacement abroad is tested on the same relationship-to-you factors as one next door, but the practical and reporting consequences of owning foreign rental property are a separate subject.

Within the fifty states and the District of Columbia the answer is simply yes, and the replacement period is unaffected by distance; what happens when the award is paid in installments explains how that period's end date is fixed.

Moving the equity across a state line changes the state tax picture, not the federal one

The state where the property was taken taxed its income and will expect to tax the gain on its disposition. Whether that state follows section 1033, and whether it keeps a claim on the deferred gain when the replacement sits elsewhere, depends on the state's conformity rules, which differ. The state-by-state 1031 hub lists each state's treatment of deferred exchange gain, and the same agencies answer the section 1033 question; confirm the taking state's position with your CPA before the replacement is chosen.

The replacement state will tax the property's income from the day you own it and will have its own view of the carried-over basis when you eventually sell. Hypothetically, a $2,000,000 award for a California building reinvested in a $2,000,000 Arizona building defers the federal gain in full; the California and Arizona consequences of the eventual sale depend on each state's rules and are not read off the federal statute. Run both sets of numbers with your CPA.

Withholding at closing is another state-level item. Several states withhold on sales of real property by non-residents, and a replacement bought out of state becomes a non-resident sale when it is eventually sold; the hub lists the forms and exemptions by state.

A DST interest holding property in several states

Because the statute has no location test, a trust holding net-leased buildings in several states is not disqualified by geography, and multi-state tax issues inside a DST explains the filing consequences of owning fractional interests across state lines. The interest is illiquid, however, and the equity can be lost if the properties underperform.

The prior question is whether a beneficial interest in a Delaware Statutory Trust is section 1033 replacement property at all, and on that no ruling, regulation or opinion has been found. DSTs for 1033 proceeds sets out the arguments; the qualification question goes to your tax counsel before the location question is worth asking. Property taken by eminent domain takes the decision from there.