Using a 1031 exchange to buy employee housing for a small business

Real Estate Agent
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Using a 1031 exchange to buy employee housing for a small business

Joe Dvorak
Member since 2020 · 5 posts · 1 vote

Hi,

   I'm a real estate agent in Western Wyoming and I have a client interested in buying a property to be used as employee housing for their small business. They have an investment property they are looking to sell as well. Does anyone have experience or know of any resources about using a 1031 exchange to purchase employee housing for a small business? Any thoughts or ideas are appreciated!

Thanks!

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Jeff Nash
Accountant · McKinney, TX · Member since 2023 · 393 posts · 580 votes
3y

@Whitney Nash can help address any Q&A but it seems on the surface like a doable fact pattern.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    3y

    I'd say get a really good 1031 intermediary and have the client run the full scenario by them to stay in compliance. 

    0Reply
  • Jeff Nash
    Accountant · McKinney, TX · Member since 2023 · 393 posts · 580 votes
    3y

    @Whitney Nash can help address any Q&A but it seems on the surface like a doable fact pattern.

    2Reply
  • Joe Dvorak
    OP
    Member since 2020 · 5 posts · 1 vote
    3y

    Thanks! This is my first experience with a 1031 so wanted to make sure I was on the right track. 

    0Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    3y

    @Joe Dvorak, The way that statute reads is "any real estate purchased with the intent of holding for productive use in trade business or for investment".  The "trade" has been interpreted over the years as real estate supporting a business.  Things like caretakers housing, managers houses, the building a restaurant is in or employee housing for a business when it is supporting the business and used to enhance the business or retain employees.

    Perfectly fine.

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