Relinquishing or selling one property and replacing it or buying another is an exchange.
The use of the term equity in real estate investing refers to the amount of capital contributed by the owners or the difference between a company’s total assets and its total liabilities.
1031 Exchange Rules
- Property must be like-kind real estate
- Real estate must be used for investment or business, and not be considered stock in trade or personal property
- Property replaced must be of equal or greater value to the property being relinquished
- Boot must not be received by the seller
- Title of the relinquished property and the replacement property must be in the same taxpayer name
- Replacement property must be identified within 45 days of closing on the sale of the relinquished property
- Replacement property must be purchased within 180 days of closing on the sale of the relinquished property.