In 1031 exchange can you buy a replacement property with a partner

Buying & Selling Real Estate
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In 1031 exchange can you buy a replacement property with a partner

Kiran Dhillon
Member since 2023 · 5 posts · 1 vote

Hi All, I had owned a property on my own name and just sold it last week and transferred the money into 1031 exchange.  I want to know if i can buy replacement property with a partner.  I Sold the property for $500K and we want to buy a million dollar property but i don't qualify so i wanted to see if i can have a partner and i have my 50% share. 

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Joe Vesey
Financial Advisor · Member since 2020 · 69 posts · 35 votes
2y

Yes, but it cannot be in an LLC as then the taxpayer would be different on the purchase side vs the sell side of the 1031 exchange. You could look at going into title as tenants in common where you each own an undivided interest in the real estate. Definitely discuss w your tax advisor too.

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  • Joe Vesey
    Financial Advisor · Member since 2020 · 69 posts · 35 votes
    2y

    Yes, but it cannot be in an LLC as then the taxpayer would be different on the purchase side vs the sell side of the 1031 exchange. You could look at going into title as tenants in common where you each own an undivided interest in the real estate. Definitely discuss w your tax advisor too.

    1Reply
  • Kiran Dhillon
    OP
    Member since 2023 · 5 posts · 1 vote
    2y

    Okay that make sense. My tax person said that i have to buy on my name and after one year i can add partner in it.

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Nope. As long as your share is more than $500k, and you reinvest all your cash you’ll be fine. You could buy a $500k property, 1/2 of a $1mil property, 2/3rds of a $750k property, or 1/10th of a $5million property. (Or more in each case obviously.)

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    2y

    @Kiran Dhillon, You have to take title to at least as much real estate as you sell.  Anyone can take title to the other %.  If you sold for $500K then you nee to purchase for at least $500K.  If you want a partner to take title as a tenant in common to the other $500K that is perfectly fine.  No need to wait.

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  • Kiran Dhillon
    OP
    Member since 2023 · 5 posts · 1 vote
    2y
    Quote from @Bill B.:

    Nope. As long as your share is more than $500k, and you reinvest all your cash you’ll be fine. You could buy a $500k property, 1/2 of a $1mil property, 2/3rds of a $750k property, or 1/10th of a $5million property. (Or more in each case obviously.)


     okay i see, Thank you Bill

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  • Kiran Dhillon
    OP
    Member since 2023 · 5 posts · 1 vote
    2y
    Quote from @Dave Foster:

    @Kiran Dhillon, You have to take title to at least as much real estate as you sell.  Anyone can take title to the other %.  If you sold for $500K then you nee to purchase for at least $500K.  If you want a partner to take title as a tenant in common to the other $500K that is perfectly fine.  No need to wait.


    yes you're right. Thank you Dave

    1Reply
  • Jacopo Iasiello
    Investor · Miami Beach, FL · Member since 2017 · 362 posts · 109 votes
    2y

    Hi Kiran, It's advisable to seek legal and financial advice when structuring the partnership and drafting any relevant agreements. A real estate attorney can assist with drafting a partnership agreement that outlines the rights and responsibilities of each party and addresses any potential contingencies.

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