Two contiguous properties with separate postal addresses may could still be considered one property (for the purposes of the three-property rule for designating replacement property for 1031 exchanges), such as a duplex, or a farm with adjoining land in two different counties, cities, or states.
Please review Rev. Proc. 2002-22: https://www.irs.gov/pub/irs-drop/rp-02-22.pdf
Even if they are non-contiguous parcels of property, if they operate as a single economic unit (for example, an office building and a garage that services the tenants of the office building) may be treated as a single business unit even if the office building and the garage are not contiguous.
The IRS will generally treat contiguous parcels as comprising a single business unit. Even if the parcels are not contiguous, however, the IRS may treat multiple parcels as comprising a single business unit where there is a close connection between the business use of one parcel and the business use of another parcel.
The question is will the IRS treat a Delaware Statutory Trust (“DST”) as a single economic unit and deem it to be one property for 1031 identification purposes.
The safe play is to assume that a DST that is comprised of multiple non-contiguous parcels of property takes up multiple slots under the three-property rule.
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