Marriage and 1031 Exchange
Hi everyone,
My husband and I are about to start on our journey of real estate investment. We are very excited about it. However, we found out that we probably can't be qualified for 1031 Exchange because of our marriage.
Here is the situation:
My husband wants to sell a house that was gifted to him. We would like to take the money, break it down, and use them as down payment for a few new rental units.
Everything sounds so positive so far, but here comes our problem:
We live in California, which means any property bought by either one of us would become a co-owned property by the law here.
So, here are some of our concerns:
1. Is selling a sole ownership property and buying a co-owned property allowed for 1031 Exchange?
2. Since we are buying outside of California, maybe we don't even need to be worried about that law, and it wouldn't force us to own it together?
3. I can give up my half of the ownership, but seems like this is considered as gifting, which is taxable.
Thank you so much for reading my long post. I hope that someone who had similar experience or the knowledge can share some guidance!
--YH.