Can Partners or LLC Members do Individual 1031 Exchanges?

Owning property in an LLC or an entity that is taxed as a partnership can be problematic when the various partners want to separately do 1031 exchanges. As a result, reconfiguring the ownership well before the sale might be advantageous. The best method of reconfiguration here is the tenancy-in-common model.

In a tenancy-in-common, you take those various individuals out of the partnership and deed them an undivided interest in the underlying real estate and have them hold that interest for some substantial period of time so that they can say they've held the property for investment or business and do a subsequent 1031 exchange on their slice of the relinquished property.

Coordinate with Your Team

That process requires coordination with your accountant, lawyer, financial planner, and the qualified intermediary because even if we break up as tenants-in-common but we still continue to report the asset as a partnership asset we may not have advanced the ball because we continue to conduct ourselves as a joint venture partnership.

Planning ahead is always a good idea and involving your accountant, lawyer, and intermediary early in the process can only benefit you.

Get Your Exchange Off the Ground

Considering the tax-saving benefits of a 1031 exchange? Contact a qualified intermediary today to work through the details of your transaction. Our intermediaries are well-versed in the process and can ensure that you defer 100% of your capital gains taxes – no matter where your sale is taking place. Contact us today at our office in downtown Minneapolis to get your 1031 exchange off the ground!

  • 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.

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