1031 Exchange Rules
1031 Exchange Rules
1031 Exchanges require an acquisition period of 180 days, during which the
property investor must identify potential properties for the exchange (within 45 days) and acquire said
investment property or investment properties. The acquisition period begins at the close of escrow on the relinquished investment property. Furthermore, all 1031 exchanges must adhere to one of the following rules:
The Three-Investment Property Rule states that the exchanger must identify up to, but no more than three potential investment properties during the acquisition period.
1031 Exchange Rules Continued:
The Two Hundred Percent Rule - If three or more replacement investment properties are used in the exchange, their total value must not exceed 200% of the value of the investment property relinquished.
The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply, the exchange may still qualify assuming that the aggregate value of the replacement investment properties accounts for at least 95% of the value of the relinquished investment property at the time of sale.
Many 1031 exchange property investors are drawn to tenants in common exchanges due to the pre-approved financing options available.