All Forum Posts by: Cogit Aretoo

Thank you again Dave.

First, THANK YOU all for responding. I did not respond previously because I wanted to find out some information first. Please remember My knowledge of 1031 exchanges is VERY limited so I might say something stupid here. After reading the responses I realized I was not clear about some important facts. This transaction took place 25 years ago and there was a Qualified Intermediary (just found that out, and I didn't even know about QI's until I read the response from Steve Babiak). The reason I asked this question in the first place is because frankly, to me, it didn't pass the “smell test” . Creating a partnership and having two of the partners use the house as their primary residence sounded to me like a sham transaction. The address for the partnership is The Mothers home. To complicate the issue even more, when the mother dies the daughter will inherit the mothers 1/3 of the partnership meaning that the partnership will have only 2 partners both of which live in the home as their primary residence and they continue to pay rent to themselves. As I said, to my uneducated ears, it doesn't sound legit. PLEASE comment and THANK YOU ALL again. I have already learned a lot from your responses.

Please help me answer what should be a simple yes or no question that is currently part of a family dispute. I know little to nothing about 1031 exchanges. Thank you all for reading this post and for any comment you may have.

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Three family members (Mother, Daughter, Son-in-law) formed a General Partnership with equal ownership.

The Partnership acquired a mortgage and purchased a home.

Two of the Partners (Daughter & Son-in-law) immediately moved into the home as their primary residence, and began to pay rent to the Partnership.

Years later the home had appreciated in value and the home was sold.

The Partnership purchased a new home and two of the partners (Daughter & Son-in-law) immediately moved into the home as their primary residence and began to pay rent to the Partnership.

Does the sale of the first home and the purchase of the second home qualify for 1031 treatment?