1031 in personal name to LLC for new property?

Question

I am looking at planning for a 1031 exchange. I have a property in my own personal name but I would want the new property to be in an LLC with a DSCR loan. How can this be accomplished ?

Ghassan Jabali · Answer

Hello Patrick,

I hope you're doing great. Generally, we would recommend working with a Qualified Intermediary to make sure the process is done with the loan and complying with the 1031 exchange rules and regulations. One big rule for a 1031 exchange is about ownership interest being with the same owner/taxpayer. Any LLC you are wanting to hold the title would need to be owned by you 100%, directly or indirectly, if the original property is owned by yourself 100%.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Steve Wolterman · Answer

Hey @Patrick Shep Like KC said, if you are the owner of the property you are selling you can set up an LLC as a disregarded entity and get a DSCR loan for your replacement property.

KC Ushijima · Answer

You'll need to work with a Qualified Intermediary to do the 1031 exchange. You will also want to consult with your CPA, and a local real estate attorney.

If the property is in your personal name, then you can set up a Single Member LLC that has a Disregarded Tax Election.

That way, the income generated by the Single Member LLC will pass through to you. So the taxpayer is essentially the same party, you.

So you will want to work with the Qualified Intermediary. It is in your best interest to review with your CPA and attorney.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Casey Owens · Answer

Hi Patrick,

Good question! For 1031 purposes, the key requirement is taxpayer continuity — meaning the same taxpayer that sells must also be the one to buy.

Since your current property is in your personal name, the replacement must also be purchased by you unless the LLC is a disregarded entity (like a single-member LLC where you’re the sole owner). If it is, you're likely fine. If not, a 1031 won’t work without more complex structuring.

The DSCR loan is a separate issue — lenders may require the new property to be in an LLC, so be sure to check with them on their title requirements.

Hope this helps clarify!

Dave Foster · Answer

@Patrick Shep, One of the requirements of the 1031 exchange is that the taxpayer for the relinquished property has to be the same taxpayer for the replacement property.

The way the LLC is structured would determine if this would work. If you completed your 1031 and put the property in a single-member disregarded LLC, meaning that the LLC has one member and does not file its own tax return. That would be fine.

If you did a 1031 exchange and put the property in a multi-member or regarded LLC, then that would change the taxpayer to the entity, which would not meet the taxpayer requirements for a 1031 exchange.

Fulton Abraham Sanchez · Answer

@Patrick Shep, hi. A 1031 exchange from a personally held property into an LLC using a DSCR loan is possible, but it requires careful planning to stay compliant with IRS rules (especially around "same taxpayer" requirements). There are a few structuring strategies that can work depending on your timeline and goals. Happy to connect and walk you through the best approach.

1031 in personal name to LLC for new property?

1031 in personal name to LLC for new property?

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