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 property being purchased must be equal to or greater than the value of the income property being sold.

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