1031 exchange using a "REIT" like entity between 2 LLCs

[SHAW ALI]

Wanted to know if a 1031 exchange can be done where the selling LLC buys shares in a "homemade REIT" (basically some mechanism for selling shares in an LLC) in another LLC which also holds properties, both LLCs owned by same group of investors. This way the selling LLC can be freed from the timelines to find properties and close deals, using the proceeds that are now parked in the 2nd LLC to opportunistically invest properties without timeline constraints.

Please contact  me if I have not been able to communicate my "newbie"  idea across

[Dave Foster]

@SHAW ALI, I think that's a non-starter for a couple of reasons.  First of all a 1031 must be a sale of real property (not shares or membership interest in a company that owns property) and a purchase of the same.  

Secondly, an LLC selling to an LLC with substantially the same membership would not pass muster as being unrelated parties and if you get into related party issues....well let's just say you don't want to get into related party issues!

Third, an unrelated QI must be involved to hold money and administer the timelines so I dont think there's any way you're going to get around those timelines short of a reverse exchange, or using options and contingent contracts.