1031 Exchange Requirements




1031 Exchange Requirement

To fully defer all capital gain taxes, the 1031 exchange must meet four 1031 Exchange Requirements:

Reinvest 100% of Proceeds: The value of the 1031 tax free property being purchased must be equal to or greater than the value of the rental property being sold.

  • Debt on replacement rental property is equal to or greater than the debt on the relinquished rental property.

  • Each exchange, including tenants in common exchanges, requires the use of a Qualified Intermediary to hold all proceeds of the transaction, prepare any paperwork, and answer any technical questions involved with the exchange.

  • Finally, a 1031 exchange is defined as the exchange of any like kind rental property or rental properties for another like kind replacement rental property or rental properties. As such, all rental properties involved in the exchange must be qualified like kind rental properties in order to incur the benefits involved with any 1031 tenants in common exchange.


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