mwaller

Converting a principal residence to minimize taxes by combining IRC §1031 and §121 When the Exchanger’s principal residence is used partially for business purposes, such as a home office or duplex, half of which is rented, then the Exchanger must allocate it between the personal use and business use. The portion allocated to [...]

Exchanging with a related party Exchanges between related parties are allowed but the Exchanger must follow specific rules before the exchange will qualify for tax deferral. Related parties are defined in IRC §267(b) and §707(b)(1) as any person or entity bearing a relationship to the Exchanger, such as certain members of a family [...]

Tenant-in-common – investor beware A recent trend with respect to 1031 exchanges is the explosion of the tenant-in-common (“TIC”) ownership opportunities. A tenant-in-common (“TIC”) property is investment real estate whose ownership has been split into a number of undivided fractional shares. Investors who are typically unaffiliated with each combine their exchange proceeds to [...]

Refinancing - timing is everything Often, and Investor will want to take some equity out of a Replacement Property to be utilized for other investments or for personal use.  Section 1031 provides that cash taken by an Investor as part of the exchange and not reinvested into the Replacement Property will be treated [...]

Single Member LLC’S Any natural or legal person (individual, corporation, partnership, LLC, trust, etc.) may elect to complete a 1031 exchange on the sale of property held for investment or property utilized in a trade or business.   The general rule is that an Investor must acquire title to the Replacement Property in the [...]

Conversion to personal use - 5 year holding period required A fairly common strategy of Investors is to convert investment property acquired as part of a 1031 exchange to personal use and then dispose of the property under the provisions relating to the sale of a principal residence.  Section 121 of the Internal [...]

Do vacation and second homes qualify for IRC §1031 treatment? Vacation and second homes that are held by the Exchanger primarily for personal use do not qualify for tax deferred exchange treatment under IRC §1031. When vacation homes are used both for personal purposes and business purposes, the allocation between the uses becomes [...]