2-way 1031 Exchange experience?

[Eric Peoples]

Hello.. This is my first post as i have been just absorbing all of the great info.  Does any one have any experience successfully doing two simultaneous bilateral 1031 exchanges?  Myself and the seller/buyer will essentially swap properties.  I have a Fourplex (owned outright) I am selling and would like to 1031 as down payment into their 20 unit building, I would need to secure the loan for remaining 75% of the 20 unit purchase price..  At the same time the seller of the 20 unit building will 1031 some of their proceeds from sale of 20 unit to the purchase of my Fourplex.  I have spoken with a broker and a lender i have used in the past.  Broker says it is do-able (maybe a boot?) however the particular lender said we would need the downpayment for the 20 unit in hand and the sequence of the deal would be a problem.  I was hoping it could be handled in escrow somehow??  Hopefully this makes sense, would appreciate any feedback or if anyone has ever done something similar.

[Dave Foster]

@Eric Peoples, It's certainly doable.  Technically you don't need a QI to handle it.  A simultaneous exchange like that is the old school way.  And it worked for 75 years until the modern deferred exchange using a QI came into being with the Starker v Commissioner case.  

Since you're the one buying up I doubt if you'll have a boot situation.  However, if the other party is receiving cash they will need to use a qualified intermediary or face possible disallowing of their exchange.  The valuations are important in determining their reinvestment target.  I'm tagging @Jay Hinrichs, who's politely of the vintage to give you the horror stories of straw men, cash boot, and dry land in West Texas to balance out valuations - all with exchanges done without a QI.

For the minimal cost I'd recommend that you engage a QI anyway so there's no slips and accidental recognition of gain - particularly on their side.