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Updated almost 2 years ago on . Most recent reply

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1031 Membership Interest Sale?

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We own a duplex in a disregarded llc and want to sell the membership interest of the llc to our buyer to avoid transfer taxes. We wanted to do a 1031 but they said it may not work because the llc's member is a partnership. If we sell the llc interest and duplex and the partnership later buys land to develop on, wouldn't that work? We're not pulling any funds out and both partners are doing the exchange. 

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Bill B.#1 Real Estate Deal Analysis & Advice Contributor
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  • Las Vegas, NV
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Bill B.#1 Real Estate Deal Analysis & Advice Contributor
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  • Las Vegas, NV
Replied

You’ll need an expert like @Dave Foster. But my first question about the deal is are you really selling real estate if you sell the LLC? It also worries me that the "experts" that know everything about the deal say it won't work whereas we have few details. Is the person you'r selling an unrelated party? If so shouldn't they pay the transfer tax anyway? I assume if selling llc partnerships was a legit way to get around the tax everyone would do it.

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