All Forum Posts by: Lauren Speidel

@John Warren, thanks for the mention!

@Troy Danno If you and your wife live in a CA, which is a community property state, together you may be considered the same tax paying entity. I would confirm with your tax advisor/CPA that adding your wife onto the replacement is considered the same tax paying entity. Regarding the LLC, if the LLC is the same tax paying entity as you (or you and your wife), you can purchase in your LLC or amend title down the road without any holding requirements. If the LLC is not the same tax paying entity or your wife isn't considered the same tax paying entity, it would be wise to purchase the replacement in your name, season it for 12-24 months to prove your intent to hold and then amend title.

Regarding the operation of your current LLC, if your LLC is doing business in multiple states, there may be reporting and registration requirements for those states. It would be advised that you discuss your LLC with your attorney to see what states you are actually doing business in and which states require registration or have requirements of their own.

@Dieggo Goncalves The primary residence exclusion can only be used once every two years. Be mindful of that as you sell both. 

@Eric Tan As mentioned above location should not be the main focus when choosing a Qualified Intermediary (QI). You want to make sure they have the safeguards in place since our industry is completely unregulated. Only 1% of QIs have any government oversight. You also want to make sure they hold client funds in separate and segregated dual signature Qualified Trust Accounts or Qualified Escrow Accounts. They should also carry insurance and bonding and should be able to provide you with their binders to confirm coverage. Let me know if you'd like to chat further.

@Paul Moore Thanks for the mention.

@Max Kats If the LLC is a single member LLC, disregarded entity then you can sell in the LLC and buy in your name or another single member LLC, disregarded entity. Disregarded entities are viewed as one in the same as yourself so you're considered the same tax paying entity.

If the LLC you mention is a regarded entity (not viewed as the same as yourself), then that entity is the one beginning the Exchange and must finish the Exchange by purchasing the replacement in that LLC.

Please let me know if you have more questions!

@Andrew Daniel You can sell your current rental and buy another property that you intend to rent. If you would be using it personally then it could be considered a second home/vacation home. You would need to rent the property for at least 14 days of each year and it's recommended you do this for two years and limit your use to 14 days or 10% of days rented, whichever is more. I've helped many people purchase these types of replacement properties, let me know if you'd like to chat more.

@Tom Knox You will want to hire a Qualified Intermediary (QI) to assist you with your 1031. We usually tell clients once they have a signed contract or estimated closing date, is the best to open your Exchange account. Keep in mind not all QIs are created equally. Anyone can be a QI so make sure the organizations you interview have safeguards in place like insurance, bonding, experience, expertise, etc. We also hold Exchangors funds in a separate and segregated Qualified Trust Accounts. Holding in a Qualified Trust Account or Qualified Escrow Account will protect you in case your QI files for bankruptcy and as you know, these are unprecedented times. You want to make sure the QI you choose can withstand the current situation. Message me if you'd like to discuss our services. 

@Mike Sola As stated above, a fix and flip doesn't qualify for Exchange treatment because when doing a 1031 your intent must be to hold the relinquished and replacement property for rental income, appreciation, or use in a business/trade. With a fix and flip your intent is to infuse cash into the property and to sell. But even if you were to move forward with the 1031, you will need to reinvest all of your equity (not just your gain), all of your debt value, and trade equal or up in value based on the net sales price of the relinquished property. At that point, it would be recommended that you season that replacement purchase for a few months and then you can consider a cash-out refinance. The cash-out portion is not taxable. I'd be cautious about doing a cash out refinance too close to the sale or purchase because under audit, the auditor could possibly view it as attempting to avoid taking cash at closing because that is taxable.

@Doug Webb A 1031 Exchange can certainly be an option. As long as they've help the property for rental income, which it sounds like they have because you are renting from them. They could defer the tax liability and roll the proceeds into another investment property or even a DST (Delaware Statutory Trust) if they aren't looking to actively manage a property.

Another option could be structuring an installment sale. With an installment sale they are breaking up the gain and spreading it over several years, instead of all at once. Depreciation recapture would be due in the year of the sale.

It would be wise for them to discuss the 1031 Exchange and possible installment sale structure with their tax advisor or CPA.

@Kyle Fitzpatrick Yes, like-kind is very generic. As long as you have had the intent to hold both the relinquished and replacement property for rental income, appreciation, or use in a trade or business, it qualifies for Exchange treatment.

You can sell a residential property (as long as it has been used for rental income) and buy land (used for appreciation). It should qualify.

Let me know if you have more questions!

@Kevin Lisewski Notice 2020-23 which was released on April 9th does provide an extension for 1031 Exchange taxpayers who are currently engaged in a 1031 Exchange transaction. The extension granted applies to investors that have already sold and closed on the sale of their relinquished property and their 45-calendar day identification period or their 180-calendar day exchange period falls between April 1st, 2020 and July 15th, 2020. The 45-calendar day identification and the 180-calendar day exchange deadlines have been extended to July 15th, 2020.