A client recently brought up an important question about 1031 exchange transactions. They asked:
“Can we convert our ownership to tenant-in-common (TIC) interests so each of us can do our own 1031 exchange when the property sells?”
In some situations, the answer is yes. However, the bigger point is that TIC ownership is only one of several ways to create flexibility when co-owners may want different exit strategies.
Depending on the ownership structure, financing, timing, and each owner’s goals, there may be several approaches to consider, and each approach comes with different tax, financing, control, and administrative implications. That is why these conversations are best had years before a contemplated sale and not weeks before closing.
1031 exchange flexibility depends on planning long before the closing of your relinquished property. Co-owners generally have three options:
Separate before the sale.
Restructure ownership.
Exchange first, separate later.
As always, the specific facts matter, and tax and legal advisors should be involved in evaluating the alternatives.
Contact an Experienced 1031 Intermediary at CPEC1031, LLC
If you are considering a 1031 exchange of investment real estate, contact a qualified intermediary early in the process. A skilled intermediary can help guide you through the 1031 exchange process and ensure you don’t fall into any potential traps for the unwary. CPEC1031, LLC has been working in the 1031 exchange industry for more than twenty years. Let our team assist you throughout the like-kind exchange process. We are standing by and ready to put our experience to work on your next 1031 exchange. Contact our team today to learn more about the 1031 exchange process and see if your property qualifies for 1031 treatment.
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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