Can I 1031 Exchange this?
Hey BP!
Lend me your wisdom! Please.
I've got a SFH I bought in OCT 16, rehabbed and I just got under contract in JUN 17. I intended to keep it as a rental, but we put too much into it for it to make sense and preferred to pull the capital out and put it into something else.
The numbers (rounded for easy math):
The purchase was ~54K.
I've put ~40K in.
Under contract now for 136K.
After closing costs + commissions I'm calculating ~18K profit (Not ideal, but it will set free the capital)
I have a partner who I've agreed to split the profit with, but I'll be paying him ~9K as the project manager, which will be taxed on his W2.
I'm tracking the only profit that will be taxed on Capital Gains will be my 9K.
Before we signed the contract, I informed my Realtor that I may want to do a 1031X and we put verbiage in the contract to inform the seller that it may be used in a 1031X, but that's the end of my 1031X knowledge. I didn't think I'd ever sell property, as a soft rule.
Questions:
1.) Is it worth trying to go through with a 1031X? What are some of the drawbacks in this scenario?
2.) What's the next step to accomplishing the 1031X?
Thank you for your time!
Cheers,
-Sam