1031 exchange - separately titled properties relinquished to buy jointly titled prop

PA · Member since 2008 · 29 posts · 11 votes

Hi all - My husband and I are planning to do a 1031 exchange where we would sell 2 properties to buy 1 larger property. The 2 properties that will be relinquished are titled in our names separately - one in my name and one in his. We have owned them for 10+ years and have always included them on our joint tax return. We planned to title the new property in both of our names. Is there any issue with this approach? If so, any suggestions on how to address would be appreciated. Thanks!

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Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

Nope. Because you filed jointly. All the irs cares about is that it’s the same tax payer. Because you pay together before and after you remain the same tax payer. IMHO. :-).

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
Nope. Because you filed jointly. All the irs cares about is that it’s the same tax payer. Because you pay together before and after you remain the same tax payer. IMHO. :-).
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
1y
@Denise B.

@Bill B. Bingo! Yeah, as long as you file jointly, the name won't be an issue since you file a joint tax return.

When doing a consolidation exchange, you want to be mindful of the time frames since the clock starts at the sale of the first property. The best way to do this is to negotiate as extended a closing as you can on the first property to go under contract. This will allow you more time to get your second property sold and cluster the time periods more closely.

You would naturally have to sell your relinquished properties before taking title to your replacement property, but nothing says you can't go under contract for your replacement property right away or after the first one goes under contract to make things smoother.
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Denise B.
OP
PA · Member since 2008 · 29 posts · 11 votes
1y
@Bill B. @Dave Foster Thanks for your responses!
The property that is in my name is a duplex and we are also considering dividing it into 2 separately deeded townhomes so we could sell them separately. I don't think that should cause any issues either since there would be no change of ownership.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
Nope. But it would make it harder to have 3 sales within that 45 or 180 limit instead of 2. Make sure it’s worth it.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Denise B. In a 1031 exchange, the taxpayer selling must be the same as the one buying, so if the relinquished properties are titled separately—one in your name and one in your husband's—you can’t simply acquire the replacement property jointly without risking disqualification. To stay compliant, you each should do a separate exchange and title the replacement property accordingly, then consider retitling jointly after a safe period (typically two years). Alternatively, setting up a joint entity beforehand could work, but must be done carefully. Work closely with a qualified intermediary and CPA to structure it properly and preserve tax deferral.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
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