Property title implications

Buying & Selling Real Estate
5yFollow

Property title implications

Gina Qing
Member since 2019 · 15 posts · 4 votes

Hello community friends, I am debating on how to hold the titles to the two properties that are under contract, given some future implication and changing financial situation in our household. There are lot of my own assumptions below, so please bear with my explanation and please feel free to correct me and your advice would be much appreciated. 

Currently, I'm a W-2 earner, and can get qualified to obtain mortgage myself to purchase two properties without adding my husband as co-signer, in which case, I will be the only owner of the titles to the properties. However, since I will become self-employed in the next year or so. In an event when I am ready for 1031 exchange the properties, my understanding is new properties have to be held in the same title, which I assumes I would be the only one who would need to obtain the new mortgage for the new properties. But being self-employed, my concern is that it would be very hard for me to get qualified for mortgage in future.  So, I am debating, maybe I should have both my name and my husband name on the titles, despite he also needs to be the co-signer of the mortgage for these two properties now, in order for us to be able to obtain finance in event of 1031, with me being self-employed in future?

Your expertise and suggestion would be very much appreciated. 

Thank you!

Best Regards

Gina Q.

0Reply
19 views

4 Replies

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

    @Gina Qing, From the 1031 perspective only you probably have plenty of flexibility.  If you and your husband file a joint tax return then the properties will be reported on the Schedule E of your personal return.  That makes you and your husband both the tax payer for the property regardless of who is on title.  So if you have a compelling reason for leaving your husband out of it now.  You can take title yourself with you as the only borrower.  And when you get ready to sell and 1031 later you can sell as yourself and buy as your husband or you, or the two of you together and it will not change the tax payer.  It will still be your joint return.

    So really it comes down to lending issues which is better.

    The 1031 Investor5140 Reviews
    WebsiteView Page
    0Reply
  • Gina Qing
    OP
    Member since 2019 · 15 posts · 4 votes
    5y

    @Dave Foster thank you very much for your expertise, Dave. Your answer relieves me a lot. However, what if the current property is titled to a LLC, and later to be exchanged to a new property, wouldn't the new property have to titled to the same LLC, but not to personal names? In my case, since I would purchase and exchange under personal names, not involving an entity, that's why it doesn't matter if it's me or my husband or jointly on the titles as far as 1031 is concerned?

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Gina Qing, well, first mention of an LLC but that doesn't necessarily change anything. If there is an LLC owning the current property it would depend on who the members are, if it is a disregarded entity, and whether the LLC was in a community property state and if you were purchasing in a non-community property state.

    But if the LLC is a disregarded entity (you and your husband only members) and you're purchasing in a community property state then you, your husband, and the LLC are all the same entity - the property is reported on your personal tax return regardless of who is on title. If so then the LLC can sell and either the LLC, you, you and your husband, or your husband only could take title to the new property.

    The 1031 Investor5140 Reviews
    WebsiteView Page
    0Reply
  • Gina Qing
    OP
    Member since 2019 · 15 posts · 4 votes
    5y

    @Dave Foster, That makes sense. Really appreciate it for your insights, Dave! 

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free