1031 Exchange Rules

1031 Exchange Rules

1031 Exchanges require an acquisition period of 180 days, during which the property owner must identify potential properties for the exchange (within 45 days) and acquire said investment property or investment properties. The acquisition period begins at the close of escrow on the relinquished investment property. Furthermore, all 1031 exchanges must adhere to one of the following rules:

The Three-Investment Property Rule states that the exchanger must identify up to, but no more than three potential investment properties during the acquisition period.

The 200% Rule - States that, in the event that three or more replacement investment properties are used, their total market value must not exceed 200% of the value of the investment 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 investment properties must account for at least 95% of the value of the investment 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.