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1031 Exchange - Tenant in Common Requirements
Here are four general 1031 exchange requirements to keep in mind while considering your TIC 1031 exchange.
Contact us today for a detailed explanation of these requirements, possible factors that may influence them and discussion of your 1031 exchange TIC options.
- First 1031 Exchange Requirement
You must reinvest 100% of proceeds: The value of the investment commercial property being purchased must be equal to or greater than the value of the commercial property being sold.
- Second 1031 Exchange Requirement
The equity (commercial property value minus loan balance) in the new commercial property must also be equal to or greater than the equity in the old commercial property. In other words, the loan amount on the new commercial property must be equal to or greater than the loan amount on the commercial property being sold.
- Third 1031 Exchange Requirement
The property investor must not have constructive receipt of the sale proceeds at any time during this exchange period or the money becomes taxable income. Typically, this is accomplished by using a professional exchange facilitator as a middleman to hold the sale proceeds and execute the exchange documents.
- Fourth 1031 Exchange Requirement
Both relinquished and replacement commercial property must be like-kind. As used in IRC 1031(a), the words Like-Kind have reference to the nature or character of the commercial property and not to its grade or quality. One kind of class of commercial property may not, under that section, be exchanged for commercial property of a different kind or class.
Contact us today to be put in touch with a qualified TIC broker for your next 1031 exchange.
