Like Kind Exchange Requirements
Like Kind Exchange Requirement
All like kind exchanges, including
TIC exchanges, must adhere to the following requirements:
The total money reinvested into the like kind rental property must equal or be greater than the value of the relinquished rental property. In other words, 100% of the assets from the sale of the first rental property must be rolled into the second investment.
The amount of equity ( rental property value minus loan amt. ) of the acquired rental property must be equal to or greater than that of the rental property being sold.
Third Like Kind Exchange Requirement: exchangers must use a Qualified Intermediary. The Intermediary is the entity that structures, consults, guides and documents the exchange transaction from beginning to end. An Intermediary will hold the funds and provide technical experience to maintain the integrity of the exchange.
Fourth Like Kind Exchange Requirement: The rental property exchanged must be of like-kind. Many people misunderstand this provision, thinking it must be a direct swap. But the requirements are a little more generous. It is possible, for example, to exchange a vacant piece of land for an improved piece and still meet the requirements for like-kind rental property.