1031 Reit Exchange Rules
1031 Reit Exchange Rules
All
1031 REIT exchanges must comply with at least one of the following three 1031 rules in order to qualify as such:
1) The Three-Rental Property Rule - This rule allows the exchanger to identify up to a total of 3 potential replacement rental properties within the Acquisition Period.
1031 Reit Exchange Rules Continued:
The Two Hundred Percent Rule - If three or more replacement rental properties are used in the exchange, their total value must not exceed 200% of the value of the rental property relinquished.
The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply, the exchange may still qualify assuming that the aggregate value of the replacement rental properties accounts for at least 95% of the value of the relinquished rental property at the time of sale.
Many 1031 REIT exchange property investors are drawn to tenant in common exchanges due to the pre-approved financing options available.