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.
Related Persons Exchanges/Self Dealing Exchanges and Mortgages, Part 3
Some people have some blinders on when they start considering a 1031 exchange. One way you could think about it is that they suffer from cognitive dissonance – they’re not really able to square the facts with what they think they should be able to do.
One limiting rule involves related person exchanges. You can’t have a relative be involved in most 1031 deals. It just doesn’t work out. If you do go this route the relative can not also do an exchange with the funds he receives from the sale of his property from your exchange. After that, to have a valid exchange you, the exchanger, must keep the property for two years before you can do another exchange. IRA does not want families to manipulate their basis.
Question 1:
Can I use the the money of sale of rental property to pay loan on other rental property and use 1031 exchange?\nCan I use the money from stock sale to exchange to real estate?
Answer:
Unfortunately, there’s really no way to use money from stocks for a 1031 exchange. This is only for real property as defined by each state. To use cashed-out stock is dead before arrival. Paying off a loan from the sale of a property on other rental owned by you is also an idea dead before arrival.
Question 2:
I am selling a 1031 property that my wife & I own. This is the second time we will rollover the profits 1st time (purchase for 220K sold for 485K 2nd time purchase for 485K sold for 545K) taxable would be difference from 220k to 545K correct? also can we purchase a property from one of our LLC’s?
Answer:
When you’re approaching a 1031 exchange, your taxable amount is the difference between your net sale price minus your basis. Your basic shorthand of taxable difference $220K — $485K is correct. To your second question, you cannot buy a property from one of your own LLCs – that’s considered self-dealing.
About Marilee: Role of Marilee Hill, Registered Representative (RR)
Come to a professional with 20 years in the business. Marilee Hill offers credible and established 1031 exchange consulting as a FINRA certified real estate professional.
Marilee Hill makes complicated 1031 exchanges simple. She helps clients to understand the process every step of the way and how to contemplate working with the requirements of a 1031 deal from an IRS perspective.
She also excels at working with people, from clients to sponsors to anyone else who’s a stakeholder in the deal. Come to Marilee Hill for advice on how to do a 1031 deal in today’s market.
