Скачать или смотреть 1031 Exchanges: Important Title & Vesting Considerations (for Individuals, Partnerships, LLCs, TICs)

Shopping Centers of L.A.
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1031 Exchanges explained. What is a 1031 exchange?
Phil Atwan of Exchange Resources Inc dropped by the Shopping Centers of L.A. office to discuss 1031 exchanges of "like-kind” properties. A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to defer paying capital gains taxes when you sell an investment real estate property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value.

1031 Exchanges explained. What is a 1031 exchange?
Phil Atwan of Exchange Resources Inc dropped by the Shopping Centers of L.A. office to discuss 1031 exchanges of "like-kind” properties. A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to defer paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value.


How long can someone hold a property before exchanging?

Most tax professionals and CPAs will say you should own a property for 24 months before executing a tax deferred exchange. There are special circumstances or exceptions, but only as long as your original intent was to hold it as an investment.

How should title be held? Should someone consider the vesting or how title is held before going into the exchange?

Generally speaking, it should be the same title holder on the purchase that was on the sale. You should acquire in the same method in which you sold. However, it’s worth considering that to the federal government, you’re a Tax ID number, not simply a name. For example, if you and your partner have a trust, one of the transactions could be under your own names or indiviual tax IDs, and the second transaction could be completed as the trust, because the same tax IDs and social security numbers are in the trust.

If a partnership or LLC that owns the property wants to do a 1031 exchange and dissolve the partnership to go their separate ways, how is that handled?

It depends on what kind of partnership. If it’s title held as tenants-in-common, both names should be all the tax-deferred exchange tansactions.

If it’s an LLC, where the partnership owns the property and not the individuals, and it’s treated that way on their tax returns, the LLC would have to perform the exchange transaction rather than the individuals.

How should 2 partners prepare for an exchange if they plan to part ways?

2 ways. “swap and drop,” or “drop and swap.”

"Swap and drop" means the partnership itself will do the 1031 exchange, acquire 2 properties, then hold those properties for a minimum of 12-24 months, then dissolve the partnership and split up the properties between the individuals.

"Drop and swap" means they don’t sell right away, but instead, dissolve the partnership and hold the property as tenants-in-common for a minimum of 12-24 months, then finally set up the 1031 exchange transactions to go their separate ways with replacement properties.

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Shopping Centers of LA is a premier retail real estate sales and purchase transaction network in the greater Los Angeles area working under Keller Williams Commercial. As an intermediary for shopping centers we pride ourselves on connecting sellers with the best buyer for their property all while providing buyers exclusive access to real estate inventory for their next solid investment or 1031 exchange upleg.

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