1031 Exchange Question

[Spur08 382]

I have an investment property being sold in the near term - said property is an apartment complex that I was part of a syndication deal.  I've kind of lost my appetite for this syndication stuff, so I'm considering using the profits to fund an improvement project at my primary residence.  I understand the rules with "like-kind" are fairly lax, but I'm wondering if I'm risking pretty big financial consequences by not completely understanding 1031.  Is anyone aware if this would be of significant concern? If I needed to obtain a consult of some type - would it be a real estate agent (residential or commercial?) or CPA? 

 

If it is of significance, the home project it would be funding is a backyard oasis.

[Chewbacca 7780]

You cannot do a 1031 on your primary residence. Full stop.

[Spur08 382]

Well that's pretty cut and dry.  Guess I'm locked into this syndication shit for a while.

[Guest Lobo]

Unless you can bring in your former syndication partnership as a 1% LP on your primary residence.  Paperwork will be a pain in the ass and there's that annoying lien.  But your oasis will be your shangri-la.  Hookers and blow poolside, under the palapa.  

[Gil Bang 25960]

14 hours ago, Spur08 said:

I have an investment property being sold in the near term - said property is an apartment complex that I was part of a syndication deal.  I've kind of lost my appetite for this syndication stuff, so I'm considering using the profits to fund an improvement project at my primary residence.  I understand the rules with "like-kind" are fairly lax, but I'm wondering if I'm risking pretty big financial consequences by not completely understanding 1031.  Is anyone aware if this would be of significant concern? If I needed to obtain a consult of some type - would it be a real estate agent (residential or commercial?) or CPA? 

 

If it is of significance, the home project it would be funding is a backyard oasis.

ANY real estate agent worth a fuck would tell you to contact your CPA/Attorney.  I know the answer to most of 1031 questions, but I make it a habit to not give tax or legal advice. 

I frequent a small business, and got into a chat the other morning with the owner: a mexican "kid" in his 30's.  He was surprised to learn that I'm a realtor, and I was surprised to learn that he owns several rental properties...he's really living the American Dream.  Working his ass off, and building some wealth.  

Anyway, he told me that he's considering selling one of his properties.  I asked if he's going to do a 1031, and he'd never heard of it.  So, I dropped off a booklet that my title company publishes, told him that he should read it, and gave him the number of a friendly CPA to call if he has any questions.  I hope to get the listing, and of course, I will use an appropriate expert to handle the transaction, but I sure as shit ain't gonna tell anybody any more than that. 

[troph 24806]

Rules on 1031 are anything but lax.  Listen to the Wookiee. 

[Handcruser 2805]

Instead of a 1031 look in to a 1032.

[DalTxHornFan 3101]

1 minute ago, Handcruser said:

Instead of a 1031 look in to a 1032.

1031, 1032, whatever it takes.

[Spur08 382]

Instead of a 1031 look in to a 1032.

I thought you were joking...and maybe you still are, but it doesn't looking like it applies to real estate

[Guest Lobo]

10 hours ago, Handcruser said:

Instead of a 1031 look in to a 1032.

Yeah, but what if somebody invents the 1033 exchange?  You see, this is one more.  Our exchanges go up to 1033.  For when you need that extra 'umph' over the edge. 

[Sbbruin 21856]

You need to reinvest, but it doesn’t have to be into another syndicated deal.  And I believe you can plow it into some REIT stocks designed for 1031’s, but not positive.

[Sbbruin 21856]

3 minutes ago, Lobo said:

Yeah, but what if somebody invents the 1033 exchange?  You see, this is one more.  Our exchanges go up to 1033.  For when you need that extra 'umph' over the edge. 

No man, not 1033.  1032 is the key.  Nobody can make money on a 1033.  

Edited May 14, 2021 by Sbbruin

[troph 24806]

10 minutes ago, Sbbruin said:

No man, not 1033.  1032 is the key.  Nobody can make money on a 1033.  

I miss the days of the OG 1030 exchange. Sleek, easy, beautiful really.  So few words, and still tax policy genius. 

[Handcruser 2805]

I miss the days of the OG 1030 exchange. Sleek, easy, beautiful really.  So few words, and still tax policy genius. 

Only on surly can we take a 1031 exchange question and turn it into the lolz.

[Orale 1087]

Assuming it's long term capital gain, you'll have to pay taxes on it eventually when you cash out. It wouldn't be surprising if that rate goes up this/next year. So maybe cashing out this year, particularly if you have a good use for the funds, might not be a bad idea. 

[DFWTexEx 276]

Bumping this. Any lawyers / CPAs out there that do 1031 work? I am only familiar with the basics and may need some help.

[immamac 42852]

16 minutes ago, DFWTexEx said:

Bumping this. Any lawyers / CPAs out there that do 1031 work? I am only familiar with the basics and may need some help.

It's pretty easy. Do a like kind exchange during the period and then make the appropriate filings with everything. This isn't rocket science, but if you are doing complicated transactions and being crookish or skirting the law then by all means get a CPA or Lawyer involved. 

[Catpfish 618]

5 minutes ago, immamac said:

It's pretty easy. Do a like kind exchange during the period and then make the appropriate filings with everything. This isn't rocket science, but if you are doing complicated transactions and being crookish or skirting the law then by all means get a CPA or Lawyer involved. 

 I'm sure you know that it's not quite that easy.  You'll have to use a facilitator as you can't take possession of the money at any time until the exchange is concluded. 

[immamac 42852]

5 minutes ago, Catpfish said:

 I'm sure you know that it's not quite that easy.  You'll have to use a facilitator as you can't take possession of the money at any time until the exchange is concluded. 

So this is not easy? It's pretty easy. 

[Apep 645]

That’s not the hard part. Depending on the properties involved, there are common issues like avoiding or minimizing recapture that overrides 1031 or structuring the sale so that personal property under section 1031 is not part of the exchange. General planning advice like how long to wait to convert it to a personal residence or whether a cash-out refi immediately after the LKE can also come up. These are routine issues in 1031s.