Yes, you can buy multiple properties in a 1031 exchange. You are allowed to purchase up to three properties. However, if you wish to acquire more than three, there are specific 1031 exchange rules that govern this scenario.
Understanding these rules, known as the 200% Rule and the 95% Rule, is crucial for successful property identification and acquisition in a 1031 exchange.
The 200% Rule
The 200% Rule allows you to identify more than three properties, provided that the combined value of these properties does not exceed 200% of the value of the relinquished property.
This rule is particularly useful when you want to diversify your investment across multiple properties without exceeding the allowed value limit.
The 95% Rule
The 95% Rule, on the other hand, offers more flexibility by allowing property identification without reference to the sale price of the relinquished property.
To comply with this rule, you must acquire and close on at least 95% of the value of the identified properties. This rule can be advantageous if you aim to purchase multiple properties but want to focus on a larger portion of the overall value.
Summary
In summary, you can indeed purchase multiple properties in a 1031 exchange, However as long as you follow the applicable rules. It’s important to remember that the process of buying properties in a 1031 exchange is not entirely at the discretion of the investor.
For this reason, it’s highly advisable to consult with 1031 exchange experts and legal counsel to ensure you navigate the rules effectively and maximize your investment potential.
Even after outlining all the information above, dealing with 1031 Exchanges can still seem daunting. That’s why the Leveraged CRE Investment Team at Commercial Properties, Inc. is here to help you achieve your 1031 investment goals. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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