Exchange Rules

Exchange Rules

When choosing a replacement exchange commercial property for the exchange, the property investor must follow one of the following exchange rules:

The Three-Commercial Property Rule - No more than three commercial properties regardless of their market values, may be chosen as potential replacement commercial properties within 45 days of the close of escrow on the relinquished commercial property. Said commercial properties must be acquired within 180 days of the close of escrow on the relinquished commercial property.

The Two Hundred Percent Rule - The second rule holds that in the event that three or more commercial properties are identified, the market value of all commercial properties combined may not exceed 200% of the value of the commercial property, 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 an exchange only if the replacement commercial properties acquired represent at least 95% of the aggregate value of commercial properties identified.

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