It is possible that  the investor's intent can change,  but if the investor gets audited they will have to demonstrate that they did in fact have the intent  to hold both properties for rental, investment or business use. 

When you do something like that close to the sale (within the same year or so) The IRS may look at it as an attempt to take out profit ahead of the 1031 (of course if audited and examined). 

If there is an audit I am guessing if they can make some sort of plausible argument that there is non depreciable land included with your title they will do so. 

You would have to demonstrate under audit that you had the intent to hold the relinquished property for rental, investment or business use in order to qualify for 1031 Exchange treatment.Assuming that you do qualify, you could do a concurrent two-party swap as long as it is properly documented by your advisors, or you could sell your relinquished property first, structure a formal 1031 Exchange transaction through a Qualified Intermediary, and then by her property as your replacement property.Keep in mind that your relinquished property and your replacement property must be held for rental, investment or business purposes in order to qualify for tax-deferred exchange treatment.

Prep, theory, planning, etc - they eat, sleep, live and breathe taxation.CPAs are also heavy into tax, but we are also required to be experts in Accounting (Theory, Principles), Business Law and Audit (less useful for most folks). 

Hi MelCES1031,Actually, it was going through numerous IRS client audits over many years in the business.

If you are ever audited, you need to have crystal clear documentation that proves every penny that went into the LLC company was used to purchase investments.

Banks are constantly being audited by regulators asking them to justify why they make every business decision they do.

Catherine Coy, looks like this particular lender does require the CPA letter - and they won't budge even though I had a letter drafted by another CPA who audited my returns.

Will the underwriters have to audit my business bank accounts the same as personal accounts to verify funds?