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1031 Exchange Requirements


1031 Exchange Requirement

To fully defer all capital gains taxes, all 1031 exchanges must meet four separate requirements:

  • First, 100% of all proceeds from the sale of the first commercial property must be reinvested into the second, replacement commercial property.

  • Second, the amount of equity ( commercial property value minus loan value) of the replacement commercial property must be equal to or greater than that of the relinquished commercial property.

  • Third 1031 Exchange Requirement: exchangers must use a Qualified Intermediary. An Intermediary will hold the funds and provide technical experience to maintain the integrity of the exchange.

  • Fourth 1031 Exchange Requirement: Exchanged commercial properties must be like kind. The IRS definition of Like-Kind is any commercial property held for productive use in a trade or business or held for investment purposes.

    The successful completion of a 1031 exchange into tenancy in common ownership is best facilitated by a 1031 realtor who specializes as a Replacement commercial property Specialties. Contact us today to complete your 1031 exchange.