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1031 Exchange FAQs

Q. Why would someone want to do a 1031 Exchange?

To defer capital gains tax on the sale of commercial, business, or investment property.

Q. What type of property is not eligible for a 1031 Exchange?

Your residence is not eligible for 1031 treatment. Any other property that is not held for commercial, business, or investment purposes is also not eligible.

Q. How do I start a 1031 Exchange?

You must contact a Qualified Intermediary (see our Strategic Alliance section) before you sell your property, so that you can complete the appropriate documentation and structure the exchange.

Q. Do I have to use a Qualified Intermediary ("QI")?

Using a Qualified Intermediary ("QI") is the most common way to receive 'safe harbor' protection for your 1031 Exchange.

Q. Can't my own attorney or CPA serve as my Qualified Intermediary?

No. A Qualified Intermediary ("QI") must remain completely independent and cannot have been your agent in the past 2 years.

Q. How many potential replacement properties may I identify?


  • 3-property rule: You may identify up to 3 properties without regard to their value.
  • 200% rule: You may identify more than 3 properties provided that their combined fair market value does not exceed 200% of value of the relinquished property.
  • 95% rule: You may identify any number of properties, provided that you acquire 95% of the fair market value of those properties.
 
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