1031 Exchange Rules

1031 Exchange Rules

1031 Exchanges require an acquisition period of 180 days, during which the real estate owner must identify potential properties for the exchange (within 45 days) and acquire said income real estate or income real estate. The acquisition period begins at the close of escrow on the relinquished income real estate. Furthermore, all 1031 exchanges must adhere to one of the following rules:

The Three-Income Real Estate Rule states that the exchanger must identify up to, but no more than three potential income real estate during the acquisition period.

The 200% Rule - States that, in the event that three or more replacement income real estate are used, their total market value must not exceed 200% of the value of the income real estate that is being relinquished.

The 95% Exception - Finally, in the case that rules 1 and 2 do not apply, the aggregate value of the like kind income real estate must account for at least 95% of the value of the income real estate being sold in order for the exchange to qualify.

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