1031 exchange with new investors

[Sandra Chung]

I have a property in a 1031 exchange. I am looking to purchase my second property, satisfy my exchange, and bring in other investors because the second purchase is much larger than what I have in the QI. Is there a way I can structure this so that I can satisfy my exchange but also have a Tenant in Common like situation where my investors can 1031 with me or go their separate ways at the conclusion of the sale of the second property? Thank you very much. 

[Dave Foster]

@Sandra Chung, Certainly Sandra.  Your requirement to defer all tax is to  purchase at least as much investment real estate as you sold.  Tenants in common is perfect if you want partners you can stay with or separate from at the next sale.

Say your sale was for $300K and you wanted to purchase a $ 1 mil property with partners.  You would need to take title to at least 30% of the new property.  Your partners could take title the remaining 70%.  When you sell that property you will sell and 1031 your 30% and they can each do what they want with their %.

A strong operating agreement (maybe a separate operating entity) is very important in situations like this.