California 1031 Exchange Rules
California 1031 Exchange Rules
In order to comply with IRS internal revenue code, california property owners must identify potential replacement
california rental properties withing 45 days of the close of escrow and acquire said
california rental property (or
california rental properties withing 180 days of the closing of the relinquished california rental property. Furthermore, when entering into a california 1031 exchange, california property owners must comply with one of the following rules:
The Three-California Rental Property Rule - Dictates that the seller must identify up to a total of three potential replacement california rental properties within the 180 day Acquisition Period.
The Two Hundred Percent Rule holds that, if three or more california rental properties are identified as replacement california rental properties, their aggregate market value must not exceed 200% of the value of the california rental property sold.
The Ninety-five Percent Exception is used in the event that rules 1f and 2 do not apply. In such a case, the aggregate market value of the california rental properties acquired in the exchange must comprise at least 95% of the closing value of the california rental property relinquished.
Many california 1031 exchangers prefer buying 1031 california property as tenants in common because of the ease of completing the transaction and closing on california rental properties. This is due, in large part, to many pre-arranged financing deals available.