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 exchange property being purchased must be equal to or greater than the value of the
investment property being sold.
Debt on replacement investment property is equal to or greater than the debt on the relinquished investment 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 investment property or investment properties for another like kind replacement investment property or investment properties. As such, all investment properties involved in the exchange must be qualified like kind investment properties in order to incur the benefits involved with any 1031 tenants in common exchange.