1031 Exchange in Chicago land suburb! Any recommendation for a QI

Investor · Burbank, IL · Member since 2017 · 49 posts · 21 votes

My parents are looking to 1031 a 3 unit property for a 6 unit property and add my brother to the 6 unit property. Is it smart to put my brother on the deed of the new property? Will this effect the tax advantage? Would a trust be a better option?

Also looking for a Qualified Intermediary that has experience in the Chicago land area to facilitate the exchange.

I do not have any experience in 1031 so I am looking for guidance.

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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
9y
@Paul Staszel, Any QI with a national foot print will be able to help you. I'm sure that all of us regular on the forums have worked in IL and Chicago specifically.
Regarding your brother, it sounds like your parents are on title to the 3 unit. if so then they will need to sell and complete the 1031 also buying as themselves. In order to complete a valid 1031 the tax payer for the old property must be the same as the tax payer for the new property. Adding your brother before or during the exchange puts the exchange in jeopardy.
immediately after the 1031 is complete your folks may put it into a trust or an entity that includes him as a member. Once the 1031 is complete this is really a question for your accountant/estate planning attorney.
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Bill ExeterBusiness Member
1031 Exchange Qualified Intermediary · San Diego, CA · Member since 2008 · 1k+ posts · 1k+ votes
9y
Hi @Paul Staszel,
It really depends on what your parents goals and objectives are for wanting to put your brother on title to the new Replacement Property.
If they are doing it for estate planning purposes, I would speak with an estate planning/trust attorney. They could probably accomplish what they want to do through a revocable living trust without putting him on ownership/title, which has some tax benefits for him upon death. If they merely add your brother, there could be gift tax issues to worry about as well.
If they want to include your brother in the property as part of the investment/transaction or other reasons, then your parents need to make sure that the percentage of the property that they are buying through their 1031 Exchange is worth at least as much as the Sale Price of the three (3) unit Relinquished Property that they are going to sell. Your parents would own an undivided interest in the property as tenants-in-common with your brother who would own the other undivided interest in the property as a tenant-in-common with your parents.
There are a lot of moving parts here, so speaking with a good tax advisor and an experienced Qualified Intermediary is critical. We have an office in Chicago, so I'll send their contact information to you.
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