Broker Check

IRS §1031 guidelines to Qualify

  • Seller should have the contract specify that the sale may be structured as a 1031 exchange.
  • Seller cannot receive or control the net sale proceeds – the proceeds must be deposited in a qualified escrow (Qualified Intermediary). 
  • Replacement property must be “like-kind” to the relinquished property, investment property for investment property only. Personal residences and vacation homes that are not utilized primarily as rentals do not qualify for a 1031 exchange. 
  • Property must be for productive use in a business or for an investment
  • The replacement property must be equal or greater value than the relinquished property.
  • The equity of the replacement property must be equal or greater than the equity of the relinquished property.