All Forum Posts by: Lauren Speidel

@Austin Works If the syndication has been set up as a tenant in common, yes, it would work. Unfortunately many syndications are set up partnerships and in that case it would not qualify because you'd be buying shares or membership interests and not real property.

@John Warren As always, thanks for the mention!

@Jack B. Of course you can refinance a property but it's usually recommended that you don't complete a cash out refinance directly before or directly after a 1031 Exchange. Under audit, the IRS could view it as taking cash at closing, which is taxable, if its too close to the 1031. So if you plan on doing the cash out refinance I would complete that now, then give yourself a few months (the longer the better) before you engage in a 1031. If you plan on doing a cash out refinance after you purchase your replacement, you may want to wait 2 or 3 months after that closing to complete it.

Let me know if you have any other questions!

@Andrew J Palmer How has the property been reported on your mom's tax return these past 5 years? For properties to qualify for 1031 Exchange treatment you must have had the intent to hold the property for rental income, appreciation, or use in a business. It may qualify under the intent to hold for appreciation. In regards to going from a SFH to a Condo, there is no issue with that at all. When completing a 1031 to fulfill the like-kind requirement you must be going from real property to other real property so that would qualify.

Also, to have a fully tax deferred Exchange she would need to buy replacement properties that equate to the full net sales price or higher. If she decides to not reinvest all of the net proceeds, the amount not reinvested would have tax liability. 

@John Warren As always, thank you for the kind introduction!

@Jesse Snell I'd be happy to discuss your possible 1031 Exchange. How long ago did you live in your Boston property? For the vacation property, do you plan on renting it or just using it personally? If you purchase a vacation home through a 1031 Exchange, there are some safe harbor rules you should follow. For example, at least for the first two years you should rent the property for at least 14 days out of the year. You also must limit your personal use to 14 days or 10% of days rented, whichever is less. If you'd like to have a phone call, let me know!

@Wil Reichard Did you report that rental income on your tax return? If so, a portion of the property (the rented portion) may qualify for Exchange treatment.

@Wil Reichard I read your comment above and I was curious if you have rented the property? If not, it won't qualify for 1031 Exchange treatment. It is usually recommended that you rent the property for 12-24 months to prove you had the intent to hold the property for rental income, appreciation, or use in a trade or business.

@Raj Kothari as Dave Foster mentioned there are passive investments that qualify as real estate and can be used as replacement property. A syndicated Tenant in Common structure or a Delaware Statutory Trust are two options. If you have a financial advisor it would be best to discuss these structures with them to see if they are the right fit for your goals. They are very illiquid and have an average of 5-7 years hold time. They do range in sector and geographic location but can be a great option for someone looking for a passive 1031 replacement.

@Wil Reichard How long ago did you live in the property? Have you rented the property recently and if so, for how long? Section 1031 states that all parties must have an arms length transaction with the taxpayer. You could use an attorney as the QI but it is recommended that they only act in that capacity and do not provide legal advice. Keep in mind, any one can be a QI which has caused some issues with other investors because they may not have the experience and expertise needed to facilitate an Exchange. Also the industry is not regulated so it is encouraged to choose a QI who has insurance, bonding, and will be holding your funds in a Qualified Trust account. This will provide more security for your funds. As @Wayne Brooks mentioned, typical QI costs can range. I've seen as low as $500 and as high as $2,000.

@John Warren Thank you for the mention!

@Zachary Loesel If you have owned the property in your LLC and plan on buying the replacement in your LLC, then yes, you should be okay. If you'd like to discuss this further, please let me know!

@Tyler Warne You can 1031 into land. According to the IRS, it is considered "like-kind" to other real property, so that is not an issue. Which property are you buying and holding for the developer? I want to make sure I'm following your thread correctly.