1031 Exchange Rules
1031 Exchange Rules
In order to comply with IRS internal revenue code, property investors must identify potential replacement
income properties withing 45 days of the close of escrow and acquire said
income property (or
income properties withing 180 days of the closing of the relinquished income property. Furthermore, when entering into a 1031 exchange, property investors must comply with one of the following rules:
The Three-Income Property Rule - Dictates that the seller must identify up to a total of three potential replacement income properties within the 180 day Acquisition Period.
The 200% Rule - States that, in the event that three or more replacement income properties are used, their total market value must not exceed 200% of the value of the income property that is being relinquished.
The 95% Exception - Finally, in the case that rules 1 and 2 do not apply, the aggregate value of the like kind income properties must account for at least 95% of the value of the income property being sold in order for the exchange to qualify.
Contact us for more questions regarding 1031 exchanges and tenants in common exchanges and we will put you in contact with a specialist in your area.