1031.ExchangeINTELLIGENCE NETWORK
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CORE 1031

Replacement property

Also called: upleg · acquisition property

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PLAIN-ENGLISH DEFINITION

The property the taxpayer receives as the replacement in a Section 1031 exchange.

What it means in practice.

Replacement property must satisfy the applicable like-kind, use, identification and receipt requirements. The investment itself still needs ordinary underwriting and due diligence.

Why it matters.

Tax timing can create pressure, so replacement-property research often begins before the relinquished property closes.

Additional notes.

Replacement property must satisfy the applicable like-kind, use, identification and receipt requirements. The investment itself still needs ordinary underwriting and due diligence.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/instructions/i8824irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Core 1031Relinquished propertyThe qualifying property the taxpayer transfers or gives up in the exchange.Deadlines & IdentificationIdentification noticeThe written designation of replacement property in a deferred exchange.Deadlines & IdentificationThree-property ruleAn identification rule allowing up to three replacement properties regardless of their fair market value.Deadlines & Identification200% ruleAn identification rule permitting any number of replacement properties when their total fair market value does not exceed 200% of the aggregate fair market value of the relinquished properties.
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