1031 Exchange Requirements

1031 Exchange Requirement

The four requirements for all 1031 exchanges include:

The exchanger must reinvest 100% of the monies earned by the sale of the relinquished investment property into the replacement investment property or investment properties.

The amount of equity ( investment property value minus loan amount) held in any replacement investment property must equal or exceed that held in any investment property relinquished during the exchange.

Third, each property owner must use a Qualified Intermediary (QI) to oversee the transaction. A QI is a qualified individual that prepares the paperwork, holds all proceeds from the transaction, and provides any technical advise on the exchange process.

Finally, all 1031 exchanges require the exchange of like kind investment property for other like kind property. A definition of such may be found in IRC section 1031.

For more information on 1031 exchanges or tenants in common exchanges, or to be put in contact with a licensed TIC advisor, contact us today!