Need assistance with 1031 Exchange in NJ

[Shivam Patel]

I have some questions regarding 1031 exchange in New Jersey. I have 3 fully occupied properties that rent for $9200/month. Two are single family and one is a duplex. The cashflow is great, however, I am having issues trying to transfer the properties into LLCs. Should I sell the properties, take the hit, and then buy a new property under a business loan or am I allowed to 1031 while changing ownership to an LLC?

The end goal is to have a larger multifamily in an LLC name. I do have liability umbrella insurance, but I want to set up a better business structure for long term growth the correct way. I do have 2.5% interest on one of the properties which will be sad to see go.

[Dave Foster]

@Shivam Patel, Contributions into and distributions from an LLC are not normally taxable events. You can easily accomplish this with disregarded entity LLCs either before your sale or after your purchase. I would recommend that you sell as yourself and buy as a disregarded LLC. That will save you setting up a couple of LLCs.

I'll reach out via pm to see if there is more to the situation that is complicating it for you.