1031 Starker Exchange Rules
1031 Starker Exchange Rules
1031 Starker Exchange rules require a real estate investors to identify potential replacement
commercial real estate within 45 days of the close of escrow and acquire the replacement
commercial real estate (or
commercial real estate ) within 180 days of close of the relinquished commercial real estate. Furthermore, when choosing a replacement
1031 starker exchange commercial real estate for the 1031 starker exchange, the
real estate investor must follow one of the following
1031 starker exchange rules:
The Three-Commercial Real Estate Rule - Any three commercial real estate regardless of their market values may be identified by the exchanger as potential replacement commercial real estate for the like kind exchange, however no more than 3 commercial real estate may qualify.
The Two Hundred Percent Rule - In the event that three or more like kind commercial real estate serve as replacement commercial real estate, the aggregate value of said commercial real estate can not exceed 200% of the value of the commercial real estate sold.
The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply to the exchange, the Ninety-Five Percent Rule takes precedence. This rule dictates that the aggregate value of the acquired commercial real estate must account for at least 95% of the value of the relinquished commercial real estate when sold. This means that in order to engage in a 1031 starker exchange, foregoing all capital gains on the transaction, the real estate investor must reinvest at least 95% of the proceeds involved in the transaction.
Many 1031 starker exchangers prefer buying investment commercial real estate as tenants in common because of the ease of completing the transaction and closing on commercial real estate.