Replacement properties list

6 Replies

I have an exchange open where I relinquished 5 properties and put all the funds into an exchange. Do I get to identify 3 per property relinquished, or is it 3 for the exchange in total?


i think it is 3 per property relinquished  but maybe I am incorrect since its all one exchange?

And.... for anyone reading along ;). As I was thinking this all thru I realized I sold the 5 properties as "one" with one transaction, one price, one close, etc. That must be it. 


@Mary M. and @Rob Pecha .  Mary you hit it on the head.  You have one exchange going with one set of timelines, reinvestment target amounts and identification list.  

But that being said, it is not true that you are limited to 3 replacement property identifications in that exchange.  The regulation is more complicated than that and actually has some more opportunity for you that you should have been told about.

If you name three or fewer properties on your list then their value doesn't matter (for the identification list).  Your 5 properties could have totaled $500K and you could name 3 $10 mil potential replacements.  

But if you want to name more than 3 properties you can but then you have to meet one additional criteria

Either

.      1. the 4 or more properties that you identify  have an aggregate value that is no greater than 200% of your net sale.  Staying with the example of you selling for $500K - You could name 4 $250 K properties or 10 $100K properties (in these cases the aggregate value of each list is $1 mil and the net sale was $500K so your list is no more than 200% of the value of what you sold).

or

.    2. You name more than three properties and the total value of the list is greater than 200% of what you sold but you close on 95% of the value of the list (in the above example you have to close on all 4 or all 10 in order to close on 95% of the list.

For clients wanting to sell expensive assets and reinvest in smaller assets it's almost standard that their list will end up greater than 3.