Starker 1031 Exchange Rules

Starker 1031 Exchange Rules

Starker 1031 Exchange rules require a real estate investors to identify potential replacement rental real estate within 45 days of the close of escrow and acquire the replacement rental real estate (or rental real estate ) within 180 days of close of the relinquished rental real estate. Furthermore, when choosing a replacement starker 1031 exchange rental real estate for the starker 1031 exchange, the real estate investor must follow one of the following starker 1031 exchange rules:

The Three-Rental Real Estate Rule - Any three rental real estate regardless of their market values may be identified by the exchanger as potential replacement rental real estate for the like kind exchange, however no more than 3 rental real estate may qualify.

The Two Hundred Percent Rule - In the event that three or more like kind rental real estate serve as replacement rental real estate, the aggregate value of said rental real estate can not exceed 200% of the value of the rental real estate sold.

The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply to the exchange, the Ninety-Five Percent Rule takes precedence. This rule dictates that the aggregate value of the acquired rental real estate must account for at least 95% of the value of the relinquished rental real estate when sold. This means that in order to engage in a starker 1031 exchange, foregoing all capital gains on the transaction, the real estate investor must reinvest at least 95% of the proceeds involved in the transaction.

Many starker 1031 exchangers prefer buying investment rental real estate as tenants in common because of the ease of completing the transaction and closing on rental real estate.

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