The term 1031 Exchange is defined under section 1031 of the IRS Code. (1) To put it simply, this strategy allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long another “like-kind property” is purchased with the profit gained by the sale of the first property.
●The three-property rule allows you to identify three properties as potential purchases regardless of their market value.
●The 95% rule allows you to identify as many properties as you like as long as you acquire properties valued at 95% of their total or more.
●The 200% rule allows you to identify unlimited replacement properties as long as their cumulative value doesn’t exceed 200% of the value of the property sold.