Replacement Property Identification Requirements
"How does the replacement property identification process work in my 1031 Exchange?"
There are very specific rules that limit the number of replacement properties that can be identified as part of your 1031 Exchange.
The replacement property identification must be submitted to your Qualified Intermediary no later than 45 calendar days after the close of the sale of your existing property. You can change your mind as often as you wish as long as you are still inside the 45 calendar day identification period. You have three options for identifying your potential replacement properties, which include the three property rule, 200% rule, and 95% exception. The three property rule is the most common, which allows you to identify up to, but not more than, three properties of any market value. Investors usually identify three properties with the intent to acquire one property, but you could certainly acquire all three properties.
The 200% rule allows you to identify as many replacement properties as you wish as long as the total market value of the properties does not exceed 200% of the net sale price of the property you are selling. The 95% rule allows you to identify any number of properties, at any value, as long as you actually purchase 95% of the total value identified.
The identification process is complex, so call Exeter 1031 for guidance at 1-619-239-3091 or visit http://www.exeterco.com
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