I am a 50% partner in an LLC that owns a commercial warehouse that we rent out. We are selling it, and I'd like to purchase two single family homes with a 1031 exchange.
Is this possible? Can I purchase the homes in my own name? I'd like to dissolve the partnered LLC but still do a 1031 exchange, is this possible?
@Patrick Costello , It's perfectly fine to move from commercial investment real estate to Single family with your 1031.
But the taxpayer for this property is the LLC so the LLC must do the 1031. The LLC must sell the old property and buy the new properties. Taking title in your name initially isn't an option.
But you could Sell as the LLC and do a 1031. After completion working with your accountant you dissolve the LLC and distribute the assets to the former members. This is normally a non taxable event and you would end up with the sf properties you want.
The other member could have the LLC purchase other investment real estate in the 1031 so they would get that when the LLC dissolves. Or there could be cash boot from the 1031 and the other member gets the cash and the associated tax burden.
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