1031 exchange for LLC partners

[Marc Andressen]

Hi Experts,

We are three partners buying a piece of property by forming an LLC. We would like to sell the property down the lane and each of us would like to do a 1031 exchange on our own with the proceeds. We don't want to do a 1031 with our LLC. We would like to go our own ways with the proceeds of the sale and do 1031 on our own.

Is this possible? Please let me know.

Thanks,

Marc.

[Dave Foster]

@Marc Andressen, You won't be able to that without first dissolving the LLC down the road and quit claiming the property back into your personal names. If you want to 1031 individually then the property has to be in your individual names.

A drop and swap (described above - dissolving the LLC) is an extra step. And like any extra step more risky than not doing that. What might be even better is buying the property as tenants in common. And then leasing the property under a master NNN lease to an LLC that is all three of you. This way the expenses, operation, and risks of the property flow through an LLC. But ownership stays with the individuals so you can keep your 1031 option available easily.