1031 from personal name to LLC

[Rich Thomas]

Hello, I have a residential loan on a rental property that is in my name currently. I am planning on selling that property and 1031 into a larger apartment building which will be a commercial loan and held in an LLC...is there any problem with taking 1031 exchangd funds from my personal name and using them in the name of my LLC to buy a property? Thanks in advance!

[Dave Foster]

@Rich Thomas, It depends on the nature of that LLC. The statute requires that the taxpayer for the old property be the same as the tax payer for the new property.

So if you are selling a property that is in your name it is being reported on your personal tax return and you are the tax payer.  

That would make you think that finishing up buy purchasing as an LLC is a non-starter. But.... if your LLC is a "disregarded entity" LLC - meaning you are the only member and it doesn't file it's own tax return choosing instead to be taxed as a sole proprietor then the activities of the property owned by that LLC are reported on your personal return. So even thought the property is titled in the name of the LLC it is reported on your tax return - you are the taxpayer either way.

In that event it is technically allowable to sell as yourself and buy as the LLC. We would always still prefer to see as much match up as possible including deed in that instance because we'd much rather help you prevent questions rather than have to answer them. But that would be allowable.