Two 1031 exchanges into one deal?

[Robert Belz]

Hey BP,

I'm hoping to get some advice on a 1031 I plan on using this summer. 

Once the lease expires on a SFH I have, I plan on 1031ing the proceeds. My business partner plans on doing the same thing on a similar timeline. We'd like to 'partner' up on the next Investment property, understanding this can only be done as long as we are 'tenants-in-common'/co-own the property.

That said, I'm concerned we are not tracking 100% of what needs to be done to make this successful.

I am familiar with the high level facts of a 1031 (like-kind property, 45/180 day timelines, value must be greater, etc) and would really appreciate any suggestions that are out there specific to this scenario. If anyone has done this before, it'd be great to hear any lessons learned!

Thanks for your time.

[Dave Foster]

@Robert Belz, You've got it.  The tenant in common aspect will require the two of you to agree on the % allocation depending on your net sales.  Another key component is going to be making sure that your sales line up so there is as much overlap in your 45 and 180 day calendars.  Most of our clients doing this will complete the process with one of two things:

Either

1. Creating a separate managing entity and having a strong managemnt agreement.

2. After the 1031 is complete creating a new ownership entity and contributing their real estate interestes into the new entity.  The consequence of this is that now there is a new taxpayer for the property and it will have 1031 ramifications down the road.