1031 Replacement Property Limitations

 Replacement Property Limitations

In a 1031 exchange, you need to identify property that you wish to exchange into. But there are certain limitations surrounding replacement properties in a 1031 exchange. In this article, we are going to discuss some of these limitations so you can make sure that you don’t run afoul of any requirements in your 1031 exchange.

Time Limitations

First, there are some time limitations that we need to discuss. You only have 180 days total to start and finish your 1031 exchange, and the first 45 of those days are set aside as your identification period. This is the time you have to identify in writing your replacement property or properties. These are strict deadlines.

Property Limitations

In addition to the time restraints, you are also limited by the number of properties you can exchange into. There are a few basic rules that govern these limitations:

  • Three Property Rule. You are allowed to identify up to three replacement properties for your exchange.
  • 200% Rule. You can identify any amount of replacement properties as long as the total market value of all properties is no more than 200% of the value of your relinquished property.

Twin Cities Real Estate Exchanges

If you are looking to sell real estate, but you don’t want to pay a hefty capital gains tax bill, a 1031 exchange may be the best option for you! Consulting with a qualified intermediary is the first step in any exchange. An experienced intermediary can help you with all the details of your like-kind exchange. Contact us today to discuss your 1031 exchange. Our primary office is located in downtown Minneapolis, but we facilitate exchanges throughout the United States.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

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