Can I 1031 from a single house sale to a syndication?

Question

Hello.  I am thinking about selling my portfolio of single family homes.  Can I 1031 that money into a syndication deal and defer taxes?

Ashish Acharya · Answer

No, unless you can buy into a syndicated deal as TIC ownership.

Todd Dexheimer · Answer

Yes, that is very possible. We just had 3 investors come in with a 1031 Exchange on our last deal. The main issue with a single family is that the investment amount is often times too small. Our minimum and many other groups' minimum to deal with a 1031 Exchange is $500k-$1M+.

The other option is to sell and then invest in a deal that will do a cost seg and take advantage of bonus depreciation. With that, you'll get a negative K-1 that will offset a lot of your gains.

Jason Malabute · Answer

Michael—short answer: generally no. A typical syndication gives you a partnership interest, which isn’t “like-kind” real estate for 1031 purposes. The exception is if the deal lets you buy a direct property interest—e.g., a tenant-in-common (TIC)—so you’re exchanging real estate for real estate.

Caroline Gerardo · Answer

Why limit yourself to the handcuffs of selling all different SFR in one fell swoop? What you buy must be like kind and price. In this tight market finding the upleg is going to be difficult. What state how much gain from your basis plus allowed expenses?

Dave Foster · Answer

@Michael Puwal , As you can see, the answer is yes, no, and maybe so!

There are a few syndications out there that do qualify for 1031 exchange treatment, because they let you take title as a tenant in common with the syndication.  But most do not do this.  So start your search with those in this thread who said they could.

UPREITs( Real Estate Investment Trusts) or DSTs (Delaware Statutory Trusts) are also frequently used to move from an active to a passive ownership model.  Because of their unique structures have been blessed by the IRS specifically to work with 1031 exchanges.

One thing to be mindful of when exchanging into UPREITs is that once you complete your exchange, your tax-deferred journey ends there, and you can no longer exchange out of them, but you can certainly take advantage of the passive opportunities.

If you decide to invest in DSTs, you receive the initial passive opportunity,  but you can also do another 1031 exchange once the project is sold and either exchange back into bricks and mortar or into more DSTs if you want. In either case, the DST allows you to continue your tax deferral indefinitely.

Nicholas Dutson · Answer

Short answer: you can 1031 out of a single-family rental into a pooled deal, but only if the “syndication” gives you a qualifying real-property interest such as a properly structured Tenants-in-Common (TIC) interest or a Delaware Statutory Trust (DST). What you generally cannot do is exchange into a partnership/LLC interest where you’re just getting units or membership interests in the entity. The tax code treats a partnership interest as personal property, not like-kind real estate, so a typical LP/LLC syndication won’t qualify. That’s why many sponsors offer TIC or DST versions specifically for 1031 investors—because those count as direct interests in real property when they’re set up correctly.

If you go this route, think of it like trading fee title in your house for fractional fee title (TIC) or a beneficial interest in a trust that holds the property (DST). Both are widely used by 1031 investors. TICs give you undivided fractional ownership, but they need to be structured to avoid “partnership” treatment—things like management agreements and decision-making mechanics matter. DSTs are simpler for most exchangers because the trustee handles operations and, if the structure follows the standard guardrails, the IRS treats your interest as real estate for 1031 purposes.

The process mechanics are the same as any 1031: line up a qualified intermediary before your sale closes, don’t touch the proceeds, identify your replacement(s) in writing within 45 days, and close within 180 days. Make sure your replacement value and debt line up so you’re not taking taxable “boot.” Identification rules matter when you’re looking at fractional interests or multiple DSTs; most exchangers either identify up to three specific options or use the 200% rule, and they keep backups in case one deal slips.

From an investment standpoint, syndication-style TICs and DSTs are passive and can be a good fit if you want mailbox income and institutional management, but they’re not all created equal. You’ll want to underwrite the sponsor’s track record, the property and market, leverage, fees, projected hold period, and the exit plan, because your liquidity and control are limited compared to owning your own rental. With TICs, pay attention to lender requirements and voting rights; with DSTs, understand the operational limitations built into the structure and how that affects business plans like value-add.

A couple of practical tips I give clients in this situation. Start evaluating replacement options before you list the house so you’re not scrambling inside the 45-day window. Confirm—explicitly—that the offering is 1031-eligible as a TIC or DST; “syndication” is a broad term and a lot of deals are LP/LLC only. Get your intermediary, CPA, and (ideally) a real-estate attorney on the same page early, especially if there’s any wrinkle like a refinance, improvements, or co-owners. And be careful with “drop and swap” or post-closing entity moves; even when they can be structured, the step-transaction risk is real if the facts aren’t right.

Bottom line: yes, you can exchange a single house into a pooled institutional asset, but make sure you’re acquiring a qualifying real-property interest (TIC or DST), not a partnership interest. If you want, share a few details—sale price, equity amount, target markets, risk profile—and I can outline what a realistic TIC/DST lineup might look like and how to structure the identification so you stay compliant and protected.

Brock Mogensen · Answer

It is not very common to see syndication deals with 1031 money allowed.  There are some operators that do it, just have to find the right one.  The reason most syndicators don't allow 1031 money is because it complicates the legal setup of the deal.  A TIC structure is required, which changes lots of things on the legal documents.

Ryan Beatty · Answer

You can via TIC, I've done it several times now

Evan Polaski · Answer

@Michael Puwal, yes you can, but there are not a lot of operators that offer it.  And as noted, many require a fairly sizable investment threshold to allow it.

As implied, legally a deal can be structured to allow you to 1031 into a TIC formation within the syndication.  But this creates a fairly substantial level of ongoing work for the syndicator to accommodate, hence the high minimums.

Jay Y. · Answer

Could you do it through a Delaware Statuary Trust?

Can I 1031 from a single house sale to a syndication?

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