Exchange Requirements




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.

  • Third Exchange Requirement: The third requirement of Section 1031 exchanges is that you must use a Qualified Intermediary (QI). The QI prepares the exchange documents, holds the cash proceeds from the sale, and should answer any questions you may have during the exchange.

  • Fourth Exchange Requirement: Both relinquished and replacement commercial property must be held for productive use in a trade or business or held for investment and commercial property must be like-kind. Like-kind refers to the nature of the commercial property. The IRS definition of Like-Kind is any commercial property held for productive use in a trade or business or held for investment purposes.

    In order to complete your next exchange or TIC exchange, contact us today. We can put you in contact with a specialized 1031 broker at no cost to you.


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