Quote from @Bill B.:
I BELIEVE it’s just a sticking point not a prohibited one like it is with self directed Ira’s. I also BELIEVE their biggest concern is tax liability shifting. (Imagine buying a primary home from a relative for $200k more than it’s worth. They take the gain tax free. Then you sell your rental at a $200k loss.). Reach out to @Dave Foster.
Thanks. I keep reading and I am very confused. My mother had 3 rental properties and we plan to sell them. It is a lot of work to fix up and sell so I thought I would buy one from my siblings or her estate. I have a rental property that I would like to sell because it is further away from where I live than I would like. My plan was to sell to the tenants and do a 1031 exchange to buy a duplex from my mother's estate. I paid $200K for the rental property and will sell for about $600K. The remaining mortgage is $27K. The duplex was assessed at $1,575K (in California) but it requires a lot of work. I was planning to pay $1.4 or $1.5 for it. I intend to keep it and rent it. I am not trying to avoid taxes but defer them which I thought was the intent of the 1031 exchange. There will be no gain on the sale of the property for the estate since we got the stepped up basis when she passed. I am okay if I have to pay the taxes but want to make sure I really have to. It seems crazy if I bought from an unrelated party, it would be fine.
