All Forum Posts by: Ed Yuen

Thanks again for the input and the follow up, @Dave Foster. I'll see if I can figure this one out!

@Dave Foster Thanks for the input, Dave. The issue I'm running into is that the client has a low credit score (below min FICO guidelines) and with her on the loan, they wouldn't qualify. Will her 1031 exchange tax deferment be affected if she transfers the funds directly to escrow at closing without being on the loan? From the lenders perspective, this would be treated as a "gift" from them to their daughter who will be the person taking out the loan without a co-borrower, but still adding the client's name to title at closing for the percentage equal to the real estate sold. Do you see an issue with this from the 1031's side? Technically, money is moving from the 1031 account directly to escrow for a property that will have her on title so it makes sense in my mind, but I'm wondering if there's something I'm not seeing.

Hello everyone,

I have a client with a credit score below 620 which makes it tough to get a loan. Can they do a 1031 exchange and use their funds towards the down payment of a property and have their daughter take out a loan alone for the remainder of the purchase price (since she has a higher credit score)?

They would essentially gift the money from the lenders perspective, but from the 1031 perspective the funds will be transferred directly to escrow at closing so it may satisfy both sides. Thoughts?

Many thanks in advance!