1031 Exchange Rules
1031 Exchange Rules
All 1031 exchanges must comply with at least one of the following three 1031 rules in order to qualify as such:
1) The Three-Income Real Estate Rule - This rule allows the exchanger to identify up to a total of 3 potential replacement income real estate within the Acquisition Period.
1031 Exchange Rules Continued:
The Two Hundred Percent Rule - If three or more replacement income real estate are used in the exchange, their total value must not exceed 200% of the value of the income real estate 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 income real estate accounts for at least 95% of the value of the relinquished income real estate at the time of sale.
Many 1031 exchange real estate investors are drawn to tenant in common exchanges due to the pre-approved financing options available.