Assume personally held real estate to satisfy a 10-31 requirement

2 Replies


I'm about to get into contract with my small building in NYC and will be attempting to do a 10-31 exchange. In this, I'm going to have to replicate 1.5mm dollars in financing with the newly exchanged properties. As part of the 1.5mm of financing, I'm hoping to assume the mortgage and title of a rental property that I just bought in my personal name and transfer it to my LLC that is doing the exchange. I would then like to have the 335k mortgage of the new go towards the 1.5mm in financing I would need to replicate. I have been talking to experts on here and gotten great information from @Dave Foster. I'm told this is somewhat grey and might not make the IRS happy. The LLC is run as a 2 person partnership with me owning 99% of the shares. Does anyone have any thoughts or experience on this matter?

@Roger R. , a strategy I have used to assist the transfer of property to an LLC that does not trigger the due on sale clause is the use of land trusts, since the St. Germain Act of 1982 protects this transfer. I identify the process to move from your name to a land trust with your LLC as beneficiary in this article - ignore the initial financing advice and focus on the process.

I think doing the transfer isn't a problem. I'm concerned that IRS will say that this rental property that I want to transfer from personal name to LLC is ineligible for a 10-31 because I own the LLC.