All Forum Posts by: Alex P.

Thanks for the feedback Greg Scott and Natalie Bender. Sorry for not clarifying in the original post. The proceeds are currently with the QI. 

I'm referencing what is referred to as the "disregarded entity exception" or "Same Taxpayer" rule.

https://www.1031.us/using-disregarded-entities-like-kind-exc...

https://www.firstexchange.com/vesting-title-1031-exchange

It would appear there's precedence for treating a single member LLC that's a disregarded entity for tax purposes the same as the individual in taking title to replacement property in a 1031 exchange. Does anyone have any experience doing this in a 1031 exchange?

Does anyone have advice regarding doing a 1031 exchange, where the goal is to take title back as an individual and dissolve the LLC that the relinquished property was held in (without triggering a taxable event)?

I have sold a property owned by a Single-Member LLC (formed in California) and will be replacing with a portfolio of DSTs. The SMLLC was treated as a disregarded entity for tax purposes (married filing jointly). I would like to take title on the DSTs as an individual and dissolve the LLC for simplification purposes.

Options seem to be:

1) Take title as individual on replacement property

2) Take title as LLC on replacement property, then transfer to individual later

3) Take title as LLC on replacement property, maintain LLC indefinitely

Appreciate advice from anyone experienced in this matter. 

I’m having trouble getting a business owners policy due to a combination of having a unique and older 35+ unit apartment complex that was built in the 1950s and needing to meet Freddie Mac requirements. Most carriers are saying no.

Does anyone have any experience to share here or know a broker who might be able to help in this area?

Does anyone have experience trying to refinance a multi family commercial loan with Fannie a second time on the same property, after the first attempt failed?

About a year and a half ago, we were pretty far along in the refinance process with Fannie, but the loan fell through at the last minute due to occupancy dropping below 90% one month, combined with the condition of the property, I’m told. Since that time, we have made the repairs noted and held steady occupancy.

I’m wondering if anyone has had any luck going back to Fannie on the same property or if it’s expected that they won’t consider the deal again?

Thanks for sharing your experience!

Thanks for the information @William Hochstedler and @Robert Gilstrap.  To confirm, then, the PM would set up (or already have set up) the trust account(s) and the rents are made out to the PM company. Does the owner typically have any access to the operating account other than the ability to deposit money into it for reserves?

I am currently in the process of negotiating with a property management company to manage a multi-family rental and I'm curious about how others in the BP community structure their accounts. Can anyone advise on whether these are fairly standard practices for the accounts managed by the PM company? (This property is in Indiana)

Operating Account:

- Trust fund account set up by the owner with property management company as trustee

- Collected rent is deposited into the operating account, including checks made out to owner per tenant lease

- This account is used to pay expenses, management fee, loan payments, taxes and owner distributions

- This account to maintain a minimum amount for property management to use for operations

Reserve Account:

- Trust fund account set up by the owner with property management company as trustee

Thanks for your feedback/guidance.

Thanks @Marco G. and @Steven Hamilton II. I'll report back after consulting with a CA attorney if there's anything to add to the advice given on this thread.

Thank you for the insights! I have a few follow up questions to make sure I'm understanding correctly.

@Dave Foster

So you're saying, in terms of the 1031, if my wife and I are filing jointly on sched E, it doesn't actually matter if the name on title is solely myself, a sole-owner LLC, or an LLC with my wife and I?

@Steven Hamilton II

"IN is not a community property state so you would have to file a partnership return if you and your wife own the LLC."

Does this assume the LLC is formed in CA, IN or in either case?

"In addition to that you WILL be subject to the CA $800 franchise tax."

Are you saying that regardless of the state the LLC is formed in, because our joint return is filed in CA, it will be subject to $800 CA franchise tax?

"Oh and keep in mind CA may not recognize your 1031."

Are you saying CA may not recognize the 1031 due to the replacement property being held in an LLC?

Noted on the recommendation to hold personally.

Thank you for your clarifications.

First time posting to the BP forum. Have to send a big THANK YOU to all of the folks sharing their experiences and information in this community. Very much appreciated.

I am in the middle of a 1031 exchange, having just sold a SFH rental in California and now closing in on identifying the replacement (leveraged multi unit commercial) property in Indiana, with the funds being held with a QI.

The relinquished property title was held only in my name, as I purchased it before marriage. Now married, I intend to hold the title of the new property in the name of the LLC that my wife and I will form for it.

As I understand it, single member LLCs are considered disregarded pass through entities. And LLCs owned by a husband and wife in community property states (like CA) can be considered disregarded entities. But LLCs in non-community property states (like IN) are treated like partnerships.

Aside from consulting with a CPA and real estate lawyer, I was wondering if anyone in the community has advice on best strategy here? The answer might be obvious to some, but I'm still trying to answer the following questions:

1. If my wife is to be on the title, do we have to form the LLC in CA rather than IN so as to keep the disregarded pass through status to succeed with the 1031 exchange?
2. Should I purchase the replacement property in my name and transfer title to LLC at a later date? I believe there are potential issues to sort out with the lender.
3. Should I purchase the replacement property with new sole member LLC, then add my wife to the LLC later?

Thanks in advance for sharing your thoughts on this topic.