Condo development and 1031 exchange

[Michael Wolffs]

I have bought and am renovating a 3 unit building.  I'm now going over my options to get my money out of this building.  My choice are rent and hold, sell a single unit, or convert the units to condos and sell them individually. 

My question revolves around the last option, converting to condos.  If I do this, they'll sell in three individual units.  How would this work with a 1031 exchange.  Is a 1031 exchange possible in this scenario?  If so, would it be three separate exchanges?  Would it, or could it, be a single multitransactional exchange (if that is even possible)?

Going further if it's three exchanges, could those be combined into one single purchase transaction on the back end.  By this I mean that I sell the individual condos for $300K each, but then buy a single $1 million property, using that to close out all three of the individual condo exchanges.

Does anyone have any idea if any of this is viable?

[Aaron Smith]

@Bill Exeter

@Dave Foster

I have a similar situation to Michaels. I bought a fourplex using a 1031 exchange and am now in the process of condo converting to 4 condos. Since the area is only getting better, I do intend to hold the units and rent them out.

Judging from the answers above, I would assume I would have to do a 1031 exchange for each condo unit, should I sell them down the line. My question is what happens to the rule that the new property must be higher in value than the relinquished property? Would that value just be divided by 4? I'm assuming the deferred taxes from the previous property would also be divided by 4 and be deferred again at the sale of a condo unit. Kind of tricky, thanks for your input!