"Equal or Greater Value"

Understanding this prerequisite is crucial for identifying eligible replacement properties for your exchange.

In a 1031 exchange, the IRS mandates that the replacement property acquired must be of equal or greater value compared to the relinquished property being sold. This requirement is fundamental to the tax-deferred nature of the exchange.

Essentially, it means that the investor cannot pocket any of the proceeds from the sale of the relinquished property without incurring taxes; instead, all proceeds must be reinvested into the replacement property or properties.

Ensuring that the replacement property is of equal or greater value serves several purposes:

Considerations

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