SFR to multi family?

[Matt Good]

Can you 1031 your 1 SFR into 1 multi family or even multiple multi family's? Yes, it's an expensive house. I've been told that it has to be a "like" exchange. Please help!

[Dave Foster]

@Matt Good, Let me clear up a couple of things for you.

1. Yes you can 1031 from SFR to MF. The type of structure is not and issue. The issue is that the real estate, both that sold and that purchased are "held for productive use in business, trade, or for investment".

However, there is no revenue producing requirement.  So you may exchange residential for industrial, commercial for land, or SF for MF - as long as your intent is to hold it for productive use.  

2. It is critical that the tax payer for the old property be the same as the tax payer for the new property. However this does not preclude using LLCs as you move forward. A single entity LLC is probably going to be a pass through entity and all activity will be on your personal return anyway. That makes you the real tax payer anyway regardless of the name on title. Don't let the LLC issue dissuade you. It's easily overcome.