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1031 Exchange Rules


1031 Exchange Rules

1031 Identification Rules

1031 Exchange Rules require property owners to identify like kind commercial properties for replacement within 45 days of the close of escrow on the relinquished commercial property. Furthermore, all replacement commercial properties must be acquired within 180 days of close on the relinquished commercial property. All 1031 exchanges must comply with one of the follow three rules:

  • The Three-Commercial Property Rule - This rule allows the exchanger to identify up to, but no more than 3 potential commercial properties as qualified replacement commercial properties within the allotted time frame.

  • 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 realtor in your area.