Exchanging 1031 Property Between Family Members

 1031 Exchange Family Members

Here’s a common question we get a lot – “Can you 1031 exchange property between family members?” In other words, can you sell your relinquished property to your brother, or acquire your replacement property from your mother? In this article, we are going to talk about 1031 exchanges between family members.

Related Parties

When it comes to exchanges between related parties, there are several rules set in place. The first rule is that any property involved in a related party 1031 exchange must be held for at least two years after an exchange.

In addition to that, related party exchanges cannot be structured to avoid an imposition of tax. This is where things get a little gray because it can be difficult to differentiate between the right and wrong way to defer taxes when selling real estate. The IRS has fought several cases on this topic and won, making things even more murky.

Ultimately, if you have any questions about the legitimacy of a related party exchange, contact a qualified intermediary to discuss your situation.

Begin the 1031 Exchange Process

A 1031 exchange allows you to defer a hefty capital gains tax bill when selling real estate – but only if you satisfy all the requirements. That’s where a 1031 exchange intermediary can help – by making sure you’ve got all your bases covered for your 1031 exchange. The qualified intermediaries at Commercial Partners Exchange Company have over two decades of experience working with clients on their 1031 exchanges. Our intermediaries can help guide you through the steps of your exchange of real property. Contact us today at our downtown Minneapolis office to get the ball rolling.

  • 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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