1031 Exchange Rules

1031 Exchange Rules

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

The Three-Rental Property Rule states that the exchanger must identify up to, but no more than three potential rental properties during the acquisition period.

The 200% Rule - States that, in the even that three or more like kind rental properties are selected in the transaction, their aggregate value must not exceed 200% of the value of the rental property that is being relinquished.

The 95% Exception - Stipulates that the aggregate value of any and all like kind replacement rental properties must account for at least 95% of the value of the relinquished rental property in order for the exchange to qualify. This rule will apply only if rules 1 and 2 do not apply to the specific situation.

Contact us for a free consultation with a net lease with option broker regarding all upcoming 1031 TIC exchange opportunities.

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