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1031 Exchange With Relative
I am currently in a situation where I am trying to help a seller who accepted my offer with a 1031 Exchange. Unfortunately he was informed that because the property he wants to exchange is owned by his in-laws he will be unable to execute the 1031 exchange. From what I have read there seems there might be some ways around this such as maybe changing the percentage of ownership in the property so they aren’t considered a relative. Any advice is greatly appreciated!
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Bill Exeter
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Bill Exeter
#2 1031 Exchanges Contributor
Professional Services
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#2 1031 Exchanges Contributor
- 1031 Exchange Qualified Intermediary
- San Diego, CA
Hi @Raymond Lawton,
Dave's last suggestion would have risk. The IRS could take the position that the acquisition of the property by you was merely a "step" in order to get around the related party rules. A sharp auditor would likely classify it as a step transaction and then disqualify the 1031 Exchange.
- Bill Exeter
Exeter 1031 Exchange Services, LLC and Exeter Trust Company
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