Identify the Right Property

Select potential replacement property using 1 of 3 options:

1. Up to 3 properties of any value
2. Any number of properties with a combined value of less than 200% of the value of your relinquished property
3. Any number of properties, if you acquire 95% of the combined value of the identified replacement property

Make Sure Your New Property Is Like-Kind

Your replacement property must be like-kind to your relinquished property, For example, real estate for real estate.

Ensure Equal Value

To defer all capital gains tax, you have to use all relinquished property proceeds to purchase “like-kind” replacement property of equal or greater value.

Meet the Purchase Period

You need to identify your replacement property within 45 days and acquire all of it within 180 days of selling your relinquished property.

Ensure Qualified Use

You have to hold your relinquished and replacement properties for investment or productive use in a trade or business. You can’t hold it for resale or personal use.

Understand property ownership requirements.

Also, know there’s no set holding period. Treat your replacement property as an investment, not as inventory.