IRC 1031 Exchange Requirements

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IRC 1031 Exchange Requirement

There are four distinct requirements applicable to all IRC 1031 exchanges :

In order to qualify as an IRC 1031 exchange, 100% of the monies earned through the sale of any rental property must be reinvested in the replacement rental property.

Also, the amount of equity held in any like kind rental property for reinvestment must be greater than or equal to that of the relinquished rental property.

Third IRC 1031 Exchange Requirement: The property owner mustn't have constructive receipt of the sale proceeds during the exchange period or else all funds become taxable income. Typically, this is accomplished using a professional exchange facilitator to hold sale proceeds and execute the exchange documents.

Fourth IRC 1031 Exchange Requirement: Both relinquished and replacement rental property must be like-kind. As used in IRC 1031(a), the words Like-Kind have reference to the nature or character of the rental property and not to its grade or quality. One kind of class of rental property may not, under that section, be exchanged for rental property of a different kind or class.

Contact us today to be put in touch with a qualified IRC 1031 realtor for your next IRC 1031 exchange.

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IRC 1031 Exchange Requirements