Exchange Rules
Exchange Rules
When choosing a replacement
exchange commercial property for the exchange, the
property investor must follow one of the following
exchange rules:
The Three-Commercial Property Rule - No more than three commercial properties regardless of their market values, may be chosen as potential replacement commercial properties within 45 days of the close of escrow on the relinquished commercial property. Said commercial properties must be acquired within 180 days of the close of escrow on the relinquished commercial property.
Exchange Rules Continued:
The Two Hundred Percent Rule - If three or more replacement commercial properties are used in the exchange, their total value must not exceed 200% of the value of the commercial property relinquished.
The Ninety-five Percent Exception - Finally, in the event that rules 1 and 2 do not apply, the exchange may still qualify assuming that the aggregate value of the replacement commercial properties accounts for at least 95% of the value of the relinquished commercial property at the time of sale.
Many exchange property investors are drawn to TIC exchanges due to the pre-approved financing options available.