1. I recall that the purchase price of the replacement property must be greater than the sale price of the relinquished property.

Property B is for sale. This was a replacement property purchased as part of a 1031 exchange. The relinquished property was Property A.

Now, can Property B become the relinquished property? I know its basis is that carried over from Property A. So does the replacement property have to be as much or greater than the sale price of the Property A, or does it have to meet or exceed the sale price of the Property B?

2. What about adjustments to the basis of the Property B? Do we get credit for them or is the basis of Property B simply frozen at the basis of Property A at the time of sale?

pgreenwood:

1. I recall that the purchase price of the replacement property must be greater than the sale price of the relinquished property.

Yes, you are correct.  The replacement property must be equal or greater in value than what you sold.

Property B is for sale. This was a replacement property purchased as part of a 1031 exchange. The relinquished property was Property A.

Now, can Property B become the relinquished property? I know its basis is that carried over from Property A. So does the replacement property have to be as much or greater than the sale price of the Property A, or does it have to meet or exceed the sale price of the Property B?

Yes, your prior 1031 exchange has been completed, so property A is now out of the picture.  Property B is now your relinquished property and your replacement property must be equal or greater in value than Property B (not Property A). 

2. What about adjustments to the basis of the Property B? Do we get credit for them or is the basis of Property B simply frozen at the basis of Property A at the time of sale?

The basis should have been adjusted at the time you completed your last 1031 exchange.  The basis of the relinquished property is carried forward and is also adjusted based on any increase in value if you traded up in value and any closing costs.  The cost basis of Property B would also be adjusted over the time you owned the property if you made any capital improvements. 

The cost basis of the replacement property (Property C) will be the carried forward cost basis of Property B adjusted based on any increase in value if you traded up in value and any closing costs.

Does that help? 

Also, please keep us in mind for your 1031 exchange qualified intermediary.  We adminster all types of 1031 exchanges in all 50 states.  We look forward to working with you.