1031 in syndicated deals?

[Nick Horob]

If I were to raise a syndicated deal to purchase a large apartment complex (via a new LLC acquisition vehicle), could an investor use 1031 proceeds to invest in this LLC?

[Bill Exeter]

Hi Nick,

Actually, if there will be any financing involved, you should start with the Delaware Statutory Trust (Revenue Ruling 2004-86). Lenders shy away from TIC structures today, and title insurance companies (and lenders) tend to shy away from Land Trusts due to the various abuses involving Land Trusts. There are some lenders that will still consider a TIC structure, but those who are in the syndicated world of "co-ownership" properties are probably going to migrate to the DST.

In addition, a Revenue Ruling is stronger guidance than a Revenue Procedure, so the DST has a slightly stronger footing in terms of tax rulings.