Exchanging into Multiple Properties, Part 4

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.

Exchanging into Multiple Properties, Part 4

Exchangers can bundle properties into one lot, observing the closing date of the first property closed as the beginning of an ID period.

However, other rules apply – how the properties are titled, what the timeline is plus the debt to cash ratio all need to be understood before a sale. In selling a property and buying multiple properties, or selling multiple properties to buy one property exchangers have to be able to consolidate the timeline, add up and maintain the debt to cash ratios and make certain all the entities together can do an exchange.

Question:
I would like to exchange land that I'm selling for several small houses. the houses will not be actually built for six months after the exchange. If I purchase the houses on spec from the builder, does this qualify as a 1031 exchange under the IRS rules?

Answer:
You want to exchange land for several small houses built on spec by a builder, and to settle on the spec houses when finished? You can exchange from land to houses and you can buy more than one property with the proceeds from a single sale. However, if you cannot settle on the houses within six months of your sale property, you’re going to run into serious problems. Contemplate the right time frame here.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill knows about 1031 exchange processes – as a 20 year real estate professional, she is able to help offer clients advice on exchange replacement properties and regulations such as reg D of the Security Exchange Act of 1933.

Marilee Hill is a registered representative with a series 7 license who can help with the preliminary work of understanding what to do with a 1031 exchange deal. Then there's a qualified intermediary service that generally charges $600-$1000 or more to help achieve the deal. Marilee Hill’s services, on the other hand, are free.

Like Kind Exchange - Asset Class, Part 4
Related Exchanges and Boot, Part 1

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