Understanding Debt in a 1031 Exchange
Louis Tucci
Helping real estate & business owners achieve financial success through 1031 exchanges and alternative wealth building strategies | Co-Founder of Wealthstone Group | Real Estate & Alternative Investment Expert
Understanding Debt in A 1031 Exchange
Before we discuss the relationship of debt within a successful 1031 exchange, a quick review of the basic rules of a successful 1031 is a good place to start.
Rule #1
Must have a Qualified Intermediary prior to the closing of the relinquished property.
Rule #2
The replacement property must be “liked- kind” property. “Like-kind” refers to the character or essence of the property.
Rule #3
Replacement property must be equal to or greater than the value of the relinquished property (less closing cost related to selling the relinquished property)
Rule #4
Investors have 45 days from the date of closing to identify the replacement properties. There are 3 rules for identification; the 3-property rule, the 200% rule and the 95% rule. For more information on the identification rules you can visit my website @ www.ltuccifinancial.com.
Rule #5
180 days to close on a property or properties from your identification list.
Rule #6
Debt replacement
There is widely held misconception…