1031 Exchange Requirements
1031 Exchange Requirement
Four requirements for all 1031 exchanges and
tenant in common exchanges:
One hundred percent of the value of the relinquished income real estate must be reinvested in the like kind income real estate or income real estate at the time of the exchange.
The amount of equity held in the relinquished income real estate must be less than the amount of equity held in the new, replacement income real estate or income real estate.
Third 1031 Exchange Requirement: The real estate investor must not have constructive receipt of the sale proceeds at any time during this exchange period or the money becomes taxable income. Typically, this is accomplished by using a professional exchange facilitator as a middleman to hold the sale proceeds and execute the exchange documents.
Fourth 1031 Exchange Requirement: Both relinquished and replacement income real estate must be like-kind. As used in IRC 1031(a), the words Like-Kind have reference to the nature or character of the income real estate and not to its grade or quality. One kind of class of income real estate may not, under that section, be exchanged for income real estate of a different kind or class.
Contact us today to be put in touch with a qualified 1031 broker for your next 1031 exchange.