1031 exchange guidelines

[Robert Caccire]

Property A (investment) is under contract for sale and has no LLC. Everything is under husband and wife's name. Does replacement property have to also be under husband and wife's name for it be considered a 1031? We are looking to do an LLC on replacement property but I think we can't do one because of the 1031 exchange rules, is this correct? If so, how can we protect replacement property since we will have almost 80% equity in new property? Are there any asset protection strategies we can use? Thanks.

[Bill B.]

I assume you also have at least 8o% equity in the property you’re selling, since you have to buy more than you’d selling. So the percent of equity should be going down. 

Yes, they could get a disregarded LLC, as the IRS only cares the tax payer is the same. BUT, an LLC will almost nothing, if not nothing, to protect equity in a property. Its purpose to protect everything else except that property. Personally I'd suggest you just get an umbrella policy instead. You are 10x more likely to do something personally to get yourself sued than your property is.

As usual, I would throw in a a little promotion for @Dave Foster if you haven’t closed yet. If you search BP you’ll see he’s been handing out expert advice for years. I only suggest this as I assume you haven’t got a QI yet. This is something they should have answered for you instantly, they’re supposed to be the experts. Good luck.