1031 Exchange - Rental Propert

[Devan R.]

I have a rental property that I’m getting ready to put on the market. It was my first property I purchased. I will like to do a 1031 Exchange. The property is in Missouri and can sell for 150k. I will like to buy 2 small condos in South Florida where I live. How does the fees and acquisitions work? Will I still be required to put down 20% on each of the condos? I purchased the property in Missouri before I was married. Would I be able to add my wife on the condos? We own our primary house and another rental property here in South Florida? Thanks in advance

[Kyle Kadish]

@Devan R.  Congratulations on being in a great position and knowing about 1031 exchanges before the sale.  Your objective is to purchase 'equal or up' in the exchange - use the full $150k on the replacement properties.  How you do this is completely up to you.  If your Missouri property is free and clear, you will have $150k to use for down payments on what you purchase.  Putting 20% down for each will make the financing easier.  With that $150k, you could use 75k as down payment on two properties, and finance the rest of their purchase, or split it up (125k for one, 25k for the other).  

The second question comes down to who the 'taxpayer' is.  If you and your wife file jointly, then you are both the 'taxpayer' in the exchange and titling on the replacement properties can be adjusted to reflect that.

You'll soon see replies from @Dave Foster on the exchange, as well as some CPAs that often chime in expanding on each point.