Like Kind Exchange Rules
Like Kind Exchange Rules
When choosing a replacement
like kind exchange rental property for the like kind exchange, the rental property investor must follow one of the following
like kind exchange rules:
The Three-Rental Property Rule - No more than three rental properties regardless of their market values, may be chosen as potential replacement rental properties within 45 days of the close of escrow on the relinquished rental property. Said rental properties must be acquired within 180 days of the close of escrow on the relinquished rental property.
Like Kind Exchange Rules Continued:
The Two Hundred Percent Rule - If three or more replacement rental properties are used in the exchange, their total value must not exceed 200% of the value of the rental property relinquished.
The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply, the exchange may still qualify assuming that the aggregate value of the replacement rental properties accounts for at least 95% of the value of the relinquished rental property at the time of sale.
Many like kind exchange rental property investors are drawn to TIC exchanges due to the pre-approved financing options available.