1031 Exchange Rules

1031 Exchange Rules

When choosing a replacement 1031 exchange commercial property for the 1031 exchange, the property investor must follow one of the following 1031 exchange rules:

  • The Three-Commercial Property Rule - No more than three commercial properties regardless of their market values, may be chosen as potential replacement commercial properties within 45 days of the close of escrow on the relinquished commercial property. Said commercial properties must be acquired within 180 days of the close of escrow on the relinquished commercial property.

  • The Two Hundred Percent Rule - Stipulates that, if three or more replacement commercial properties are used in the exchange, their aggregate value must not exceed 200% of the value of the commercial property that is being relinquished.

  • The Ninety-five Percent Exception - Finally, if circumstances are such that rules 1 and 2 do not apply, the aggregate value of the like kind replacement commercial properties must account for at least 95% of the value of the relinquished commercial property at the time of sale in order for the exchange to qualify.

    To find out more, contact us and we will put you in touch with a 1031 expert in your area.



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