1031 exchange with an LLC

[Krista Ward]

Sold a property (proceeds with Qual. Interm.) & have a new property to buy. Formed a new 2 member LLC to acquire & hold new property, but accountant says it needs to be Tenants in Common. Can you do a 1031 exchange with an LLC? Thx!

[Bill B.]

The tax ID of the seller must be equal to the tax ID of the buyer. If you sold as a person you have to be on title as a person, or at worst a disregarded entity (like a single member llc). If you sold as a disregarded entity you or that llc or another disregarded llc can be on the title, but not a multiple member llc, at least not as the sole new owner. (After all, you’ve transferred ownership.)

All of this is “to the best of my knowledge”. But seeing as how your CPA agrees with me I feel pretty solid.

Ps. Your QI should have told this when you mentioned how you want to title the new property, that’s kind of their job. If you never told them, that’s your fault, if you did, that’s not good they didn’t catch it. You’re lucky to have had a good enough cpa to catch this before you bought and had your 1031 disregarded and owed all the taxes. Probably time to buy them a nice dinner.