Sometimes real estate is owned by an LLC that’s taxed as a partnership and not all of the members want to do a 1031 exchange. They would rather get out of the entity before a sale takes place so that they can take their share of the net proceeds independent from the LLC and deal with the tax consequences. This is sometimes called a TIC (Tenancy in Common) out. The reason that you want to TIC them out is that they don’t want to go along with the rest of the entity and do a 1031 exchange. Rather, they simply want to take their cash and pay their taxes. If you’re going to TIC someone out you need to make sure that you actually transfer the benefits and burdens of ownership. You need to deed them their interest. You want to assign their share of the seller’s rights and obligations in the purchase agreement. You want to notify the insurance company to add an additional insured (the new tenant in common owner). You may also want to talk to your lender that holds the mortgage and get their consent to this transfer.
Find a 1031 Qualified Intermediary
Find a qualified intermediary to help with your next 1031 exchange by reaching out to the team at CPEC1031, LLC. We have been working in the 1031 exchange industry for more than two decades. Our team can help you through all the stages of your 1031 exchange – from document preparation, to property identification, all the way to the closing table. Set yourself up for success by working with a qualified intermediary. We can make sure that you have the best shot at deferring 100% of your capital gains taxes when selling 1031 property.
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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