1031 Exchange Exchange Cheat sheet

1031 Exchange Reinvestment Requirements

Trade Equal or Up In Value 

The investor must exchange equal or up in value based on the net sales price and total purchase price so that the total purchase price of your like-kind replacement properties is equal to or greater than the net sales price of your relinquished properties.  It is important to note that it has nothing to do with your equity. 

Reinvest 100% of Net Proceeds 

100% of the investor's net proceeds or cash proceeds generated by the sale of the relinquished property must be reinvested into like-kind replacement property.  Cash can be pulled out, but it will always be taxable. 

Obtain Equal or Greater Debt 

The difference between the total purchase price(s) and the net proceeds reinvestment in the like-kind replacement properties will always be the correct amount of new debt to place on the acquired properties, unless the investor wishes to put more cash out of pocket in to the transaction and obtain less debt.

Steve