Video: 1031 Exchange: 75% or "Substantially the Same" Rule

This video explains how the rule applies to fractional ownership interests, such as Tenants-In-Common (TIC) or Delaware Statutory Trusts (DSTs), and how a 25% margin of error is allowed by the IRS regarding identified Replacement Properties. In this video, we also provide practical examples, such as scenarios where 75% or more of the identified property is acquired, more property than originally identified is acquired, and managing fractional DST interests. Additionally, we consider differing interpretations of the rule amongst Qualified Intermediaries (QIs).

Learn how this rule provides flexibility while remaining compliant with Internal Revenue Code Section 1031 states that "no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held for productive use in a trade or business or for investment." 1031 Exchange requirements.