Property identification is one of the most difficult parts of a 1031 exchange. You want to make sure you find the right property for your needs and that the properties you identify fulfill the requirements of your 1031 exchange. In this article, we are going to talk about whether or not you need to receive all of your identified properties in a 1031 exchange of real estate.
Property Identification
Identifying your replacement property is an essential step in any 1031 exchange of real property. The first 45 days of your exchange period are set aside as your identification period. This is the time in which you have to identify in writing those replacement properties into which you want to exchange. Sometimes taxpayers will identify numerous properties during their identification period to keep their options open. But do you have to ultimately exchange into all of these properties when your exchange period comes to an end?
Identification Rules
If you are identifying property using the three property rule or the 200% rule, you do not have to exchange into every single property you identify. However, if you are using the 95% rule, you do need to exchange into at least 95% of the properties you identify during your identification period.
Commercial Real Estate Exchanges
A 1031 exchange can be nerve-wracking for first-timers and veterans alike. But having a skilled 1031 professional by your side will put your nerves at ease. The qualified intermediaries at CPEC1031, LLC have over two decades of experience facilitating exchanges for taxpayers throughout the United States. Our team can help prepare your documents, advise you on replacement properties, and answer all of your questions throughout the process. Contact us today to learn more about the 1031 exchange process and get your real estate exchange in the works!
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.
© 2020 Copyright Jeffrey R. Peterson All Rights Reserved