1031 into Husband's Home?

Question

My coworker has a SFH that is negative cash flowing but that has appreciated to give her about 90k in equity. She married recently and her husband already had a home that is more valuable than her rental property. Can she 1031 into her husbands home by taking that 90k and adding her name to his note? Any other creative ideas?

Hoping to get her to join BP as a result of this discussion. @Chris Mason prob knows the answer already...?

Dave Foster · Answer

@Derek Okahashi, I think this was just on another forum wan't it?

Her husband is a related party which complicates things severely.  In addition to that there are issues with her already being the taxpayer for the property they own if they file a joint married tax return.  And if that's not enough to squash the deal California is a community property state so there may or may not be elections for how that property is treated.

And your description of simply handing cash to her husband (meaning her) and being added to the note is a big no from the get go since there is no acquisition of real estate only an addition of party to a note.

No

Chris Mason · Answer

I actually have no idea on the 1031 side...  but I doubt it. I've also never had someone ask to voluntarily be added to a note without refinancing. My gut says they would need to refinance to add her to the mortgage, though I'm not clear what the point of that would be.