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1031 Exchange Rules

1031 Exchange Properties
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1031 Exchange-TIC Info
Difficulty Finding NNN Property? Consider NNN Tenant in Common.
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1031 Exchange Rules

1031 Exchange rules require a real estate investors to identify potential replacement commercial real estate within 45 days of the close of escrow and acquire the replacement commercial real estate (or commercial real estate ) within 180 days of close of the relinquished commercial real estate. Furthermore, when choosing a replacement 1031 exchange commercial real estate for the 1031 exchange, the real estate investor must follow one of the following 1031 exchange rules:

  • The Three-Commercial Real Estate Rule - Any three commercial real estate regardless of their market values may be identified by the exchanger as potential replacement commercial real estate for the like kind exchange, however no more than 3 commercial real estate may qualify.

  • The Two Hundred Percent Rule - The second rule holds that in the event that three or more commercial real estate are identified, the market value of all commercial real estate combined may not exceed 200% of the value of the commercial real estate, which was sold.

  • The Ninety-five Percent Exception - This third rule is set in place in the event that the other rules do not apply. The exchange will still qualify as a 1031 exchange only if the replacement commercial real estate acquired represent at least 95% of the aggregate value of commercial real estate identified.

    Many real estate investors have benefited from engaging in tenancy in common commercial real estate investments because they qualify under the mentioned rules and can be completed in a timely manner.

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