1031 Exchange Related Party Question

[Stone Jin]

Hi Gang,

I have a property that is currently a rental.  My parents are thinking of buying and adding to their portfolio and I would take the proceeds and 1031 exchanging into some more properties.  Does this violate the 1031 exchange related parties clause?  My mortgage broker says it should be fine but I'm not 100% sure.  

Thanks in advance.

[Tony Kim]

Originally posted by @Christopher Phillips:

@Stone Jin

Maybe @Dave Foster can chime in...

This is an interesting situation... The question is a bit complex but people like Dave Foster can answer in his sleep. 

According to the posted link, related party 1031 Exchanges are permitted provided you follow specific rules and guidelines issued by the Internal Revenue Service. It looks like the main thing is that your parents would have to hold the property for a minimum of two years in order to convince the IRS you weren't engaging in cost swapping.