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1031 Exchange Requirements


1031 Exchange Requirement

Four requirements for all 1031 exchanges and tenants in common exchanges:

  • One hundred percent of the value of the relinquished investment property must be reinvested in the like kind investment property or investment properties at the time of the exchange.

  • The amount of equity held in the relinquished investment property must be less than the amount of equity held in the new, replacement investment property or investment properties.

  • Each exchange, including tenants in common exchanges, requires the use of a Qualified Intermediary to hold all proceeds of the transaction, prepare any paperwork, and answer any technical questions involved with the exchange.

  • Finally, a 1031 exchange is defined as the exchange of any like kind investment property or investment properties for another like kind replacement investment property or investment properties. As such, all investment properties involved in the exchange must be qualified like kind investment properties in order to incur the benefits involved with any 1031 tenants in common exchange.
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