The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.
Title Requirements and Changes, Part 2
One of the requirements for a 1031 exchange is that the title on the sale property has to match the title on the purchase property. Otherwise, the execution of this strategy can be perceived as “gaming the system” to defraud the IRS. Then there are the footnotes — Husbands and wives have different requirements and title need not always be the same!
Dealing with family members is another sub section. Want to add a child? —Two years must pass afterwards before you then sell the property in an exchange. Want to sell to a family member? Family member needs to keep property for two years. And only one of you can do an exchange. However, marriage is a different scenario you can place your new spouse on the deed at the court house.
Helping people with their exchanges is never boring because there are always new wrinkles in the world of 1031 exchanges for a very basic reason — People and their circumstances keep changing.
What is the best strategy for a 1031 exchange property? Will adding by daughter to the title cause tax penalties? Or should I leave it as is?
You must leave the title as it is; you cannot change the title near the time of sale. Two years ahead of sale would be safe, and then there is the “gift” tax to consider.
About Marilee: Role of Marilee Hill, Registered Representative (RR)
Marilee Hill brings a lot to the table in terms of real estate experience. As a broker and a property manager, Hill has learned the “rules of the road” and how to advise clients on various aspects of a real estate deal such as a 1031 exchange.
One thing that stands out in working with Marilee Hill is that she very much believes in making each deal a “people-centered deal” – she understands the value of navigating through a process with a variety of stakeholders, in close communication and in acknowledgement of everyone’s needs.
Let Marilee Hill help you with a plan to leverage a 1031 exchange opportunity.