In a 1031 exchange you have to identify or designate you replacement property within 45 days after the closing of your relinquished property, which isn’t very much time. Furthermore, it has to be identified in writing clearly and unambiguously describing the replacement properties and it has to be signed by the taxpayer and sent in before midnight of the 45th day. Generally, people use either the three property rule (which restricts the number of properties you can exchange into to three or fewer), or the 200% rule (which allows you to identify properties that in aggregate don’t exceed twice the value of the relinquished property), or the 95% rule (under which you can identify any number of properties buy you have to actually acquire at least 95% of those identified properties). Any of these rules will be valid for identifying your replacement property.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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