Using 1031 To Go Into The Next Deal With A Partner/RE Investment Group

[Stephanie Gibson]

I bought a small portfolio of properties using a 1031. I now want to sell these properties using a 1031 while purchasing a replacement property with either a partner or a real estate investment group. Are there any restrictions against doing this? Is there anything I need to inform a partner of in case they are concerned about anything? Is there anything I should be aware of since I won't be going into the next deal by myself?

[Bill Brandt]

You must individually own a set percent of the new purchase equal or greater than your selling property in the same tax paying name as when you sold. (You can't buy part of an LLC that owns a property, or buy in to a syndication as a regular LP.)

Reach out to an expert like @Dave Foster before you buy and preferably before you even sell. He can make your transaction work smooth as silk. There will be an any to make it work, but once you do it wrong it can’t be fixed. 

[Basit Siddiqi]

You would need to be a TIC investor in the new deal.

[Dave Foster]

@Stephanie Gibson like @Basit Siddiqi said, you have to take title to actual real estate with your 1031 exchange.  A membership interest in an entity that owns real estate does not count.  And the % of the real estate you are purchasing  matters as well as the actual dollar amount.  These are the kind of pitfalls that @Bill Brandt was referring to.  But in general, yes, it is fine to purchase partial interests with partners as your replacement in a 1031 exchange.

[Stephanie Gibson]

Ok got it. Thank you all for your explanations. @Dave Foster, when the time comes, I'd like to contact you if that's ok. You introduced me to my accountant Nick Aiola back in 2020 and I'm still with him:)

[Dave Foster]

@Stephanie Gibson, Absolutely.  We're connected here as well.