1031 Exchange from Residential to Commerical

[Nick R.]

Curious about a particular 1031 caveat as it applies to me... I sold a single family rental with loan and title in my personal name. I put my gains into a 1031 exchange account. Now I want to purchase a multifamily property (5+ units) with a commerical loan. 1031 exchange law requires that exchanged properties must be held by the “same taxpayer”. Meaning that the multifamily must go into my personal name. If I quitclaim the property to the LLC after closing escrow on a commercial loan, I have heard such action could trigger a “due on sale” clause whereby my total loan amount could become due and/or I could be required to pay a prepayment penalty. Without the LLC, my tax structure is less favorable and I am exposed to personal liability. Any guidance on this situation?