1031 Exchange Rules
1031 Exchange Rules
1031 Exchange rules require a property owners to identify potential replacement
rental properties within 45 days of the close of escrow and acquire the replacement
rental property (or
rental properties ) within 180 days of close of the relinquished rental property. Furthermore, when choosing a replacement
1031 exchange rental property for the 1031 exchange, the
property owner must follow one of the following
1031 exchange rules:
The Three-Rental Property Rule - Any three rental properties regardless of their market values may be identified by the exchanger as potential replacement rental properties for the like kind exchange, however no more than 3 rental properties may qualify.
The 200% Rule - Stipulates that the aggregate value of all replacement rental properties in the exchange must not exceed 200% of the value of the relinquished rental property at the time of sale.
The 95% Exception - Finally, the 95% rule stipulates that the aggregate value of all like kind replacement rental properties must account for at least 95% of the value of the relinquished rental property at the time of sale in order for the exchange to qualify. This rule applies only if rules 1 and 2 are invalid.
Contact us for a free consultation with a 1031 realtor.