I almost exclusively sell bank foreclosures for a large asset management company, and I also do a lot of marketing for wholesale deals.

If you sell a property, and do a 1031 exchange with the proceeds, but don't need all the proceeds for the down payment of the next property, are you taxed on the additional profit that isn't part of the exchange?

Quote from @Lisa Albright: Hi All,Newbie here, just a quick question we are building an addition on our second home, we have a primary residence, and two rental properties.

Just be mindful that you can't 1031 a personal residence but it might be eligible for capital gain exclusion from section 121.

For 2024, the annual gift tax exclusion is $18,000 per recipient (rising to $19,000 in 2025), and amounts above this require filing a gift tax return (Form 709).

Converting properties to multi-family is considered extensive rehab and those programs are a little more exclusive than the standard bridge loan programs. 

For these ultra exclusive co ops the fact that the tenants can turn down anyone for any reason is a big plus. 

Additionally, regarding the legal structure, an LLC seems to be the most suitable option for our situation.

Alternatively, your in-laws could partially gift the property by using the annual gift tax exclusion ($34K per couple annually), lowering the sale price and their taxable gain.

The capital gains exclusion is available to owner occupants primary residence.