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1031 Exchange Requirements


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 commercial property into the replacement commercial property or commercial properties.

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

  • Each exchange, including TIC 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 commercial property or commercial properties for another like kind replacement commercial property or commercial properties. As such, all commercial properties involved in the exchange must be qualified like kind commercial properties in order to incur the benefits involved with any 1031 TIC exchange.