Selling 96 Unit Complex; Need Help With 1031

Jonesboro, AR · Member since 2018 · 6 posts · 0 votes

Hello I just had a question for the Bigger Pockets community. I know someone personally who is selling a 96 unit apartment complex for quite a bit of money. But he doesn't understand the tax code and I don't either so I wanted to see if you all would be willing to help me out. He wants to use the money to pay off all of the real estate loans that he has and then use the remainder to build another apartment complex with 60 units and also buy a condo in Miami to AirBNB it and make some profit off of it. But I believe that he will still have to pay taxes on the amount that the property is sold unless he fills out a 1031, but I can't seem to wrap my head around the rules. If anyone could help us out that would be amazing.

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Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

@Jose Sanchez, The 1031 exchange could benefit him. But it also sounds like he's wanting to pursue a strategy (paying off existing loans) that will limit the 1031 benefit. Doesn't mean he can't do both but there's some very strategic things he needs to work through with his accountant and QI. It's the tax code - It's supposed to give you a headache:)

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Vee K.
Rental Property Investor · Denver, CO · Member since 2010 · 99 posts · 42 votes
8y
After selling his 96 unit, he will have a short and finite amount of time to identify and buy the new properties assuming he's going with the 1031 option. You are correct in that if he's not doing a 1031x, he still needs to pay capital gain on the profit.
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Bill B.Pro Member
Camarillo, CA · Member since 2013 · 217 posts · 86 votes
8y
@Jose Sanchez
This website
http://www.exeter1031.com/
has great information and describes the process well. They also work nationwide and have a great reputation.
I am not compensated for this in anyway. Just passing along a great resource that helped me greatly.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
8y
@Jose Sanchez, The 1031 exchange could benefit him. But it also sounds like he's wanting to pursue a strategy (paying off existing loans) that will limit the 1031 benefit. Doesn't mean he can't do both but there's some very strategic things he needs to work through with his accountant and QI. It's the tax code - It's supposed to give you a headache:)
The 1031 Investor5140 Reviews
Website View Page
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Account Closed
Investor · South Jordan, UT · Member since 2017 · 86 posts · 34 votes
8y
Need to cover boot? There are options out there.
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Jose Sanchez
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Jonesboro, AR · Member since 2018 · 6 posts · 0 votes
8y
@Vee K. Thank you for the reply. He plans on building new apartments after he sells these. Ff he's going to build the apartments from ground up, does that also qualify in the 1031 option?
@Bill B. I will definitely check it out. Thank you.
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Vee K.
Rental Property Investor · Denver, CO · Member since 2010 · 99 posts · 42 votes
8y
@Jose Sanchez , regardless of a construction 1031x or a regular 1031x, he has a finite amount of time to do it. If he decided to do the new build, he has to finish within the timeframe given.
For example: Let's say the time frame is 180 days. He has that amount of time to spend all the money in the 1031x account on building the complete structure. If by the deadline, and he only finished parts of the building, whatever leftover will not count toward the standing structure.
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