How It Works

It’s easy to get started with Sunwest 1031. Follow this simple process:

5 Steps to 1031 Exchange

Rules and Regulations

The 45-day and the 180-day deadlines

If a seller decides to use a 1031 like-kind exchange when selling an investment property, the IRS allows a 45-day period to identify potential replacement properties for the exchange; and up to 180-days to acquire one or more of the identified properties to complete the exchange.

The 3 Property Rule

When identifying potential replacement properties we do not need to state their market value if you only identify 3 properties or less. If you need to identify more than 3 properties you will need to state their total market value to ensure it complies with the 200% rule, or the 95% rule.

The 200% Rule

If you are identifying more than 3 properties you will need to abide by the 200% rule. This rule states that the sum of the market value of all identified replacement properties must less than 200% of the amount of the sold (relinquished) property.

The 95% Rule

If the value of the replacement values exceeds 200% of the relinquished property there is one more rule that comes into play, the 95% Rule. If the identified properties exceed 200% or the value of the relinquished property, then the investor must purchase at least 95% of the value that was identified. This usually results in the investor purchasing all identified properties.

Identifying Replacement Properties

While keeping the rules above in mind, identifying properties is easy. We only need an address, however, the more information, the better.

Here’s a short list of documents we’ll need before closing:

  • Contact info for the taxpayer or main point of contact. This is a good place to include your attorney, or tax professional so they can follow the process and have direct access to the documents.

  • Taxpayer name and address

  • Tax ID number, or Social Security Number

  • Title commitment

  • Signed Purchase Agreement (including addendums)

  • Organizational documents (if the property is not held by an individual)