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1031 Exchange Requirement

The four requirements for all 1031 exchanges include:

  • The exchanger must reinvest 100% of the monies earned by the sale of the relinquished investment property into the replacement investment property or investment properties.

  • The amount of equity ( investment property value minus loan amount) held in any replacement investment property must equal or exceed that held in any investment property relinquished during the exchange.

  • Third, each property owner must use a Qualified Intermediary (QI) to oversee the transaction. A QI is a qualified individual that prepares the paperwork, holds all proceeds from the transaction, and provides any technical advise on the exchange process.

  • Finally, all 1031 exchanges require the exchange of like kind investment property for other like kind property. A definition of such may be found in IRC section 1031.

    For more information on 1031 exchanges or tenants in common exchanges, or to be put in contact with a licensed TIC advisor, contact us today!