1031 exchange investment

[Gary Gristick]

Hi all,

My dad owns a commercial building and is looking to purchase a beach house investment property. The commercial building is sold. Closing in a few weeks. I told him about doing a 1031 exchange. The commercial building is in his name, not an LLC. Can you use a 1031 from commercial to a residential property investment? Or would there be another way to avoid the cap gains tax? Any insight would be greatly appreciated! Thanks in advance.

[Michael Knudsen]

@Michael Knudsen

If you acquire a property less than $720K in my scenario, you would have to pay cap gains tax on the “boot”, or the difference between the downleg value less closing costs, and the value of the upleg property (or properties).