Doing a 1031 with acquiring a Subject to property

[Angela Yan]

Hi!  

I am in a 1031 exchange circumstance as i got an offer on my investment properties.  Some of these deals out there are awful to replace my properties i have in contract. Can Subject to acquisition be counted towards a 1031 scenario? Any advice will be helpful. Thanks!

[Eliott Elias]

Quote from @Dave Foster:

thanks for the shout out @Wayne Brooks.  @Angela Yan, as long as you and your accountant agree that the "burdens and benefits of ownership" have passed from the seller to you it is possible to use a 1031 exchange with a sub 2.  Even though the deed does not transfer that is really a secondary concern.  The Irs is more concerned that reporting that property moves to your tax return and leaves the sellers tax return.

The issue that Wayne is getting at is valid.  But it's more an issue when selling a property as a sub 2 and starting an exchange. In order to defer all tax you must purchase at least as much as. your net sale.  And you must use all of your proceeds in that purchase.  The contract on the Sub 2 property will spell out both of those.  

 The property is deeded in the buyers name with a subject to.