Exchange Requirements
Exchange Requirement
All 1031 exchanges, including
TIC exchanges, must adhere to the following requirements:
The total money reinvested into the like kind commercial property must equal or be greater than the value of the relinquished commercial property. In other words, 100% of the assets from the sale of the first commercial property must be rolled into the second investment.
The amount of equity ( commercial property value minus loan amt. ) of the acquired commercial property must be equal to or greater than that of the commercial property being sold.
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.