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1031 Exchange Replacement Property
1031 Exchange Replacement property refers to the assets you receive in the 1031 exchange process. Replacement property must be like-kind property to the property that originally sold.
1031 Replacement property can be difficult to find because there are many investors on the lookout to defer capital gains taxes.
Types of 1031 Replacement Property
Replacement property is the like-kind property that you receive in the 1031 Exchange process. There are a number of different options for replacement property outside of the traditional real estate investment arena. See the list below of different types of qualified replacement property options that are valid for 1031 Exchange purposes:
Qualified Replacement Property
Commercial
Multiple Family Dwelling
Residential Rental
Restaurants
Retail
Mines & Quarries
Timber & Timberland
Undeveloped Land
Oil & Gas Royalties
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Identifying Replacement Property
Following are the 1031 Provisions regarding replacement property:
Proper Identification:
The replacement property must be specifically and unambiguously identified, in writing, signed by the taxpayer, by the end of the 45th day following the sale of the relinquished property.
Qualified Intermediary:
The Notice of Identification may be delivered to the Qualified Intermediary by hand, fax, mail, or overnight courier. Identifications may not be accomplished by oral communication. Property purchased within the 45 day identification period is considered to be properly identified.
Rules for identification of Replacement Property
- Up to three properties may be identified without regard to value.
- If more than three properties are identified, the total fair market value of all the properties identified may not exceed 200% of the fair market value of the relinquished property.
- The 200% limitation may be bypassed if at least 95% of identified properties are acquired by the taxpayer within the 180 day exchange period.
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