1031 exchange strategy

[Zac Davis]

I have a property that I've owned for a few years that I'm looking to 1031 exchange to something closer, and possibly better overall. meanwhile, I have just purchased a duplex which I originally planned to BRRRR. the lease on the older property is up in 6 months and the Tennant has decided to move on so it's really the best time to get out as I don't want to displace anyone right now. it's worth noting that this property is currently owned under an LLC I created, 100% owned by me.

I purchased the new property with a different LLC which I'm a 50% owner with a partner. renovations should take 4-5 months, and so here comes my question for someone who has experience with 1031 exchanges.

I'd like to finish the renovations, by then the value will be more than the old property, and finally sell this property to myself using the 1031 exchange.

it seems so simple in my head but explaining it is hard.

please let me know what you think. feel free to ask questions if you are unclear on what I'm asking. 

[Dave Foster]

@Zac Davis, As long as that LLC is a "regarded entity", the partner isn't your spouse and you don't own more than 50% then you are not a related party to that entity.

The question is going to be how to treat your partner. If you sell the new property to yourself in it's entirety then you will probably have to price it so the LLC shows a profit in order to take care of your partner. Now the LLC might be able to execute it's own 1031 exchange. But that will come down to the intent you had when you purchased it whether or not you can do a 1031 on that side of it.