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1031 Exchanges

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Adriel Cisneros
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Do the proceeds from a 1031 exchange include new fees from GP?

Adriel Cisneros
  • Investor
  • Miami
Posted Dec 5 2022, 11:30

Hello BiggerPockets -- 

Should the net proceeds from a 1031 exchange reflect the fees already debited by the GP during the original holding period (i.e. acquisition, management, disposition, etc.) ? 

And might it be possible for an LP to leverage a 1031 exchange for a separate syndication where he now acts as the GP? 

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Adriel Cisneros
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Adriel Cisneros
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Replied Dec 5 2022, 11:32
Quote from @Adriel Cisneros:

Hello BiggerPockets -- 

Should the net proceeds from a 1031 exchange reflect the fees already debited by the GP during the original holding period (i.e. acquisition, management, disposition, etc.) ? 

And might it be possible for an LP to leverage a 1031 exchange for a separate syndication where he now acts as the GP? 


Just to add clarity, the LP would exit the original Syndication while deferring capital gain taxes and launch his own PE fund. 

Is it possible?

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Dave Foster
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Dave Foster
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Replied Dec 5 2022, 12:49

@Adriel Cisneros, in your scenario the LP is a member of the entity that owns the real estate.  They do not own real estate itself.  And a 1031 exchange has to be a sale of real estate followed by a purchase of real estate.  The 1031 exchange would not be an option for that LP.

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Rick Martin
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Rick Martin
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Replied Dec 5 2022, 13:03

Afraid not @Adriel Cisneros. An LP can only defer their basis if the entire LLC (the syndication) is 1031'ing the proceeds from that sale.