Many investors have questions about like-kind exchanges involving private 721 contributions. In this article, we are going to talk a little bit about 1031 exchanges involving 721 contributions.
Buying Property with a Co-Purchaser
We see people who buy replacement properties with a co-purchaser. Let’s say that you sell a property for $5 million. Your brother-in-law has $5 million so you agree to purchase a $70 million property together as tenants-in-common rather than as partners. Remember - a single taxpayer doing a 1031 exchange can’t buy an interest in a multi-member entity or joint venture partnership – they need to buy replacement property, and a tenant-in-common interest in real estate would qualify.
Now imagine years down the line, you and your co-purchaser decide that it doesn’t make sense to be separate tenant-in-common owners of the property. Eventually you may want to each contribute your co-ownership interest to a joint-venture entity. You can certainly do a private 721 contribution. That’s the more traditional way it’s been used in the past.
Contact CPEC1031
If you have any questions about 721 contributions and 1031 exchanges, we’ve got you covered. Our qualified intermediaries are proficient in all aspects of the like-kind exchange. We’ve been helping taxpayers across the country with their exchanges for the past two decades. Let us put our experience to work for you on your next 1031 exchange. Contact us today at our Minneapolis office to learn more about our extensive 1031 exchange services.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2022 Copyright Jeffrey R. Peterson All Rights Reserved