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1031 Exchange Rules


1031 Exchange Rules

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

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

  • The 200% Rule - Stipulates that the aggregate value of all replacement investment properties in the exchange must not exceed 200% of the value of the relinquished investment property at the time of sale.

  • The 95% Exception - Finally, the 95% rule stipulates that the aggregate value of all like kind replacement investment properties must account for at least 95% of the value of the relinquished investment property at the time of sale in order for the exchange to qualify. This rule applies only if rules 1 and 2 are invalid.

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