Remember the Same Taxpayer Rule When Conducting a 1031 Exchange

Same Taxpayer Rule

There are many rules and regulations to remember when exchanging property under section 1031. In this article, we are going to revisit the same taxpayer rule and the importance of abiding by it when conducting a 1031 exchange.

What is the Same Taxpayer Rule?

In essence, the same taxpayer rule is very basic. It states that the same taxpayer who sells the relinquished property in a 1031 exchange needs to acquire the replacement property.

That sounds simple enough on the surface, but there are a number of potential pitfalls that can result from this rule. For example, the taxpayer may own the relinquished property in their name and want to acquire the replacement property with their new spouse. Or, a taxpayer may wish to acquire their new property as an LLC.

The good news is there are strategies for approaching these scenarios. The taxpayer can set up a single-member LLC to acquire their property – this allows the taxpayer some liability protection while satisfying the same taxpayer rule. Another option would be to acquire the new property as a member of a tenancy-in-common.

Minneapolis Qualified Intermediaries for 1031 Exchanges

Are you thinking about availing yourself of the tax-saving benefits of a 1031 exchange? If so, you’ve come to the right place. Commercial Partners Exchange Company has been helping taxpayers with their like-kind exchanges for more than two decades. Our qualified intermediaries bring that level of experience to each and every exchange we facilitate. When you work with us, we guide you through the entire 1031 exchange process and make sure you have all of your bases covered. Contact us today at our Minneapolis office to chat with one of our 1031 exchange professionals.

  • 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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