How to pay yourself if you elect a 1031 exchange

[Roman Capone]

Hi there,

Very new and ignorant to real estate but was somewhat dragged in without being prepared. Here's the situation.... I have a home that is currently being rehabbed and that I plan to sell next year sometime. I hope to avoid capital gains by using a 1031 exchange but then am not sure how I would pay myself and my partner?? Is this possible? Or do I need to pay the capital gains if I want money in money pocket after the sale. Any tips or suggestions are greatly appreciated. Thanks!!

[Adam Nishikawa]

Since you mention a partner I thought I would add the following:

The IRS requires the same tax entity that initiated the exchange be the same entity concluding the exchange.

Partnerships are permitted to exchange as long as the exchange is completed at the partnership level. Complex tax issues may arise when the underlying partners each have different investment goals. Consult a tax professional as a part of the planning process.