1031 Exchange - Seattle, Shoreline, Mountlake Terrace, Lynnwood

[Sherief Elbassuoni]

The Lynnwood Link light rail is getting built right now and it will go through the Cities of Shoreline, Mountlake Terrace, and Lynnwood. You can see the map in here https://www.soundtransit.org/system-expansion/lynnwood-link-extension

These three cities are going through a lot of up-zoning changes. Sometimes, what used to be a single-family house zone, is now a multi-family or apartment buildings zone.

I am currently working with a partner who has a property he would like to sell.

With the money he gets out of selling his property, we would like to buy a house (a lot can also work out) in one of these three cities (Shoreline, Mountlake Terrace, Lynnwood), tear it down, then build either multi-family townhouses or an apartment building.

Anyone in here is familiar with these up-zoning changes, and how to go through the 1031 exchange?

Thanks in advance for your help!

[Sherief Elbassuoni]

Originally posted by @Dave Foster:

@Wayne Brooks @Nik Moushon,  yep the 180 day timeline can be an issue with a safe harbor reverse under rev proc 2000-37.  The option still exists to go outside the safe harbor.  But folks doing that these days generally are pretty lawyered up in case...

About the only mitigation you can build is some cooperative efforts with the seller to purchase contingent upon receipt of entitlements.  That can buy some advance time on the start of the clock.  Other than that it is a 6 month race to get as much done as possible

Another option might be to have a back up purchase on the 45 day list that could be used to absorb the excess of the sale.

Dave, great ideas. I did not know that you can do that. Thanks for sharing