Identifying Replacement Property in a 1031 Exchange by Christopher Sanz, JD, LLM

Posted on January 04, 2022

Investors must abide by very strict timelines and specific rules to yield the favorable tax deferral benefits of a 1031 exchange of real property. For example, investors generally have 45 days following a property sale to identify like-kind replacement property and no more than 180 days to close on the replacement property without triggering a taxable event. When identifying potential replacement property, investors must consider the following guidelines:

• Investors may identify up to three replacement properties to complete the exchange
• Investors may identity an unlimited number of potential replacement properties as long as the cumulative value does not exceed 200 percent of the sale of the relinquished property.
• Investors may identify an unlimited number of potential replacement properties provided those properties can be acquired at 95 percent valuation.

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