Pennsylvania 1031 Exchange Requirements

Pennsylvania 1031 Exchange Requirement

All pennsylvania 1031 exchanges, including tenancy in common exchanges, must adhere to the following requirements:

The total money reinvested into the like kind pennsylvania rental real estate must equal or be greater than the value of the relinquished pennsylvania rental real estate. In other words, 100% of the assets from the sale of the first pennsylvania rental real estate must be rolled into the second investment.

The amount of equity ( pennsylvania rental real estate value minus loan amt. ) of the acquired pennsylvania rental real estate must be equal to or greater than that of the pennsylvania rental real estate being sold.

QI Requirement - According to internal revenue code, all exchanges must be processed with the help of a Qualified Intermediary.

Like-Kind pennsylvania rental real estate, Defined - The IRS Code defines 'like kind pennsylvania rental real estate as any pennsylvania rental real estate held for productive use in a trade or business or held for investment purposes. According to said code, pennsylvania 1031 exchanges must be the exchange of one or more like kind pennsylvania rental real estate for a separate like kind pennsylvania rental real estate or pennsylvania rental real estate.

Due to restrictive timing rule of IRC 1031, taxpayers wishing to engage in a tax-free like kind exchange are under pressure to identify and acquire suitable pennsylvania rental real estate. Accordingly, many pennsylvania real estate investors have failed to find suitable replacement pennsylvania rental real estate. With this in mind, the tenancy in common structure was specifically designed to provide persons seeking to engage in a tax-free like kind exchange with a viable replacement pennsylvania rental real estate solution.