1031 Exchange Rules

Follow

Rule # 1 Both the relinquished property and replacement property must be held for investment purposes or used in a business and be ‘like kind’.

Rule # 2 The IRS requires the investor to identify the replacement property or properties within the 45 day ‘identification period’. The identification period begins the day of closing of the relinquished property. The replacement properties much be properly identified by the Exchanger.

They may identify up to three replacement properties regardless of market value (Three Property Rule). Or they may identify unlimited number of properties provided that the total value not exceed 200% of the relinquished property (200% Rule. The minimum requirement is 95% of the value of the relinquished property

Rule #3 You must close on the replacement property the earliest of within 180 days of the closing of the relinquished property or the due date of the tax return or file an extension. And this is 180 calendar days … no time off for weekends or holidays.

Rule #4 On a delayed exchange, you must work with an IRS approved Qualified Intermediary.

For more detail

Four Basic Rules of a 1031 Exchange