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1031 Tax Exchange Requirement

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

  • In order to qualify as a 1031 tax exchange, 100% of the monies earned through the sale of any investment property must be reinvested in the replacement investment property.

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

  • 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 tax exchange is defined as the exchange of any like kind investment property or investment properties for another like kind replacement investment property or investment properties. As such, all investment properties involved in the exchange must be qualified like kind investment properties in order to incur the benefits involved with any 1031 TIC exchange.