1031 exchange transfer from an existing LLC to new LLC

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1031 exchange transfer from an existing LLC to new LLC

Soumya Brijesh
Investor · South Padre Island · Member since 2016 · 83 posts · 17 votes

Hey Guys, Question :- I have a property in Ohio under a Sole Member LLC that I am selling and doing a 1031 on another property in Texas. Can I setup a similar Sole Member LLC in Texas(with a different name) and buy the new property ?

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Mark H. Porter
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
5y

I think most of the QI’s on here, including @Dave Foster who I use, will tell you it needs to be traced to a tax filing # such as a TIN or SSN. Does the LLC file taxes separately from yourself?

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  • Mark H. Porter
    Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
    5y

    I think most of the QI’s on here, including @Dave Foster who I use, will tell you it needs to be traced to a tax filing # such as a TIN or SSN. Does the LLC file taxes separately from yourself?

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  • Bill ExeterBusiness Member
    1031 Exchange Qualified Intermediary · San Diego, CA · Member since 2008 · 1k+ posts · 1k+ votes
    5y

    Hi @Soumya Brijesh, 

    Yes, as long as both entities are single member limited liability companies, both are disregarded entities, and both are owned by the same single member (you), it would qualify for 1031 Exchange treatment.  The key is that they are both disregarded entities owned by the same person. This way both entities are disregarded for tax purposes and treated as if the properties were actually sold/purchased by you (taxpayer). 

    Exeter 1031 Exchange Services, LLC and Exeter Trust Company4.726 Reviews
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  • Soumya Brijesh
    OP
    Investor · South Padre Island · Member since 2016 · 83 posts · 17 votes
    5y

    @Mark H. Porter thanks for the response. No the LLC didn't file taxes. I filed it on my personal return

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  • Mark H. Porter
    Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
    5y

    @Soumya Brijesh Then, as Bill states, it is a disregarded entity.  Good luck!

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  • Soumya Brijesh
    OP
    Investor · South Padre Island · Member since 2016 · 83 posts · 17 votes
    5y

    @Bill Exeter @Mark H. Porter thank you  and appreciate the quick responses

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Soumya Brijesh, Sounds like you're OK on this one. But beware down the road. as portfolios and liability concerns grow the protection of a single member disregarded LLC comes into question many times. The LLC might be anonymous but if your tax return is supoened or checked the property ownership is there for all to see.

    For this reason many folks will have their single member LLCs elect to file taxes as a partnership. This means the LLC becomes a tax paying entity and files it's own tax return. This is not a disregarded entity and would need to be the selling and purchasing entity in a 1031 exchange.

    Moral of the story - it's not just the number of members, it's the tax filing status election that make the LLC regarded or disregarded.

    The 1031 Investor5137 Reviews
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