MINIMUM REINVESTMENT REQUIREMENTS

Real property that is sold must be replaced with real property. Also, as a rule of thumb the value of what is bought must be equal to or greater than the value of what is sold, less closing costs. Basically all proceeds from the sale of the relinquished property must be re-invested into the new property rather than sold for cash. If any proceeds are left over or used for other purposes they are considered a gain and are subject to taxation. If this is the case, the transaction is a partial tax-deferred exchange.

In general, IRC section 1031 provides that you must exchange for "like-kind" property. You must acquire a property with loans, equity, and sales price which are equal or greater that the property exchanged.