1031 Exchange Requirements

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1031 Exchange Requirement

There are four distinct requirements applicable to all 1031 exchanges :

In order to qualify as a 1031 exchange, 100% of the monies earned through the sale of any investment property must be reinvested in the replacement investment property.

Also, the amount of equity held in any like kind investment property for reinvestment must be greater than or equal to that of the relinquished investment property.

Third 1031 Exchange Requirement: The property owner mustn't have constructive receipt of the sale proceeds during the exchange period or else all funds become taxable income. Typically, this is accomplished using a professional exchange facilitator to hold sale proceeds and execute the exchange documents.

Fourth 1031 Exchange Requirement: Both relinquished and replacement investment property must be like-kind. As used in IRC 1031(a), the words Like-Kind have reference to the nature or character of the investment property and not to its grade or quality. One kind of class of investment property may not, under that section, be exchanged for investment property of a different kind or class.

Contact us today to be put in touch with a qualified TIC advisor for your next 1031 exchange.

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1031 Exchange Requirements