All Forum Posts by: Joe Kahn

Thanks @Bill Exeter, good to know.

Thinking of selling a condo next spring, but haven't decided if I'll do the 1031 due to the way the purchase market is right now (low inventory, etc.), so wasn't sure if I should commit at the time of signing my selling contract.

Best wishes for 2021.

I saw this on a 1031 exchange company's website

"At 1031 Exchange Place, many real estate investors contact our office just minutes before closing on their transaction and successfully convert a sale into a 1031 exchange. In most situations, a successful exchange can be accomplished as long as 1031 Exchange Place is contacted prior to closing."

Is this correct?

Thanks,

Hi everyone,

My question is if I about using sale proceeds for a 1031 exchange, from the sale of a primary residence that is also being used for AirBnB ?

The situation is as follows:

I moved into my primary residence in June 2018

Have also used it as AirBnB STR since October 2018

STR days in 2018 were 37 (income reported on 2018 Form 1040 as "Personal Property Rental Income")

STR days in 2019 to date are 69

If I sell the house this year, can I use any of the money from the sale for a 1031 exchange?

Thanks in advance.

@Dave Foster Thanks for the detailed and informative reply - appreciate it.

Appreciate any advice on how the following scenarios would work out for a new construction project, for a single family home using 1031 funds:

1.  Start the project by buying vacant lot with non-1031 funds

2. At the time ready to start construction, form a single member real estate investment LLC (called let's say "REI, LLC") that would fund the construction with 1031 funds and will eventually hold title to to a the real estate investment property

3. Sell 2 condos and put proceeds in REI, LLC account (exchange account?). Related question, will bank hold 1031 funds for 3 months before releasing for investment in new property?

3. REI, LLC buys the vacant lot with 1031 exchange account funds. Is this OK under 1031 rules?

4. Continue construction with remaining 1031 exchange funds

5. Sell 2 more condos for additional money to complete project.  

• Do I have to do this before end of item 3 above 180-day deadline? 
• Or will this start a new 180-day deadline at this point?

6. Take title to completed building in REI, LLC name

OR, to avoid any issues with the above plan:

1. Buy vacant lot and construct using non-1031 funds

2. Take ownership/title in my name, and then 

3. Buy the property with 1031 funds from the sale of 4 condos, using a new single member LLC in my name. Would this be OK under 1031 rules?

Thanks in advance...

@Dave Foster Understood - thanks so much providing the detailed explanation. 

@Dave Foster Thanks Dave - appreciate the quick response.

So, the EAT also has a 180 day limit?  That really will not work for me, because, as you also mention, it'll be hard to get construction done form scratch in 180 days.

Additionally, I'm looking at selling four properties over 12 months, so I need a holding mechanism that would sell to the entity buying with 1031 funds.

Another issue for me is selling four properties and then buying two rentals with the proceeds.  I think I'll start a new discussion on this topic.

@Dave Foster, I'm looking at a situation similar to "3. The property you want to buy doesn't exist yet and you want to construct something".  Seems like your EAT suggestion would be the one I should consider, as my timeline would be:

1. Purchase lot from cash on hand

2. Fund construction from loans, etc.

3.  When construction is complete, sell enough investment property to cover price of constructed property (including the lot purchase price) with a 1031 exchange

4. Buy the property from the EAT using the 1031 funds

Would appreciate your thoughts on the above.