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Tips To Identify Like-Kind Replacement Properties
In a 1031 exchange, you have very specific identification requirements to comply with when identifying potential like-kind replacement properties. One of the requirements is that you must identify the like-kind property for exchange to the Qualified Intermediary within 45 days of the relinquished property sale transaction. Another important requirement is identifying a qualified intermediary.
Now comes the most important part. How do you identify like-kind replacement property? Experts suggest that you must use the common property (street) address, and/or the legal description, and/or the Assessor's Parcel Number. The more specific the identification is the better. If the identification is very general or less specific there is a risk that the tax-deferred like-kind exchange could be disallowed during an audit. Exeterco.com reports:
The three (3) property identification rule limits the total (aggregate) number of like-kind replacement properties that an Investor can identify to three (3) potential like-kind replacement properties. The vast majority of Investors today use this three (3)-property identification rule.
Read more: Identification Requirements for Like-Kind Replacement Properties
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