Starker 1031 Exchange Rules
Starker 1031 Exchange Rules
1031 Identification Rules
All exchanges require that property owners identify up to three potential replacement
rental properties within 45 days of the close of escrow on the relinquished rental property. Furthermore, acquisition of said identified
rental properties must occur within 180 days of close on the relinquished rental property. All exchanges must comply with at least 1 of the 3 following rules:
Three-Rental Property Rule - allows the exchanger to identify up to, but no more than 3 potential replacement rental properties within the acquisition period.
The Two Hundred Percent Rule - The second rule holds that in the event that three or more rental properties are identified, the market value of all rental properties combined may not exceed 200% of the value of the rental property, which was sold.
The Ninety-five Percent Exception - This third rule is set in place in the event that the other rules do not apply. The exchange will still qualify as a starker 1031 exchange only if the replacement rental properties acquired represent at least 95% of the aggregate value of rental properties identified.
Many property owners have benefited from engaging in tenants in common rental property investments because they qualify under the mentioned rules and can be completed in a timely manner.