Greta
Level 9
‎11-26-2024 09:49 AM

Husband and wife have LLC with two rentals which they are selling. They wish to buy a personal second residence. Does the new purchase qualify for a like kind exchange. Would it have to be in same LLC name (they wish to close out the LLC).

0 Cheers
Reply
Terry53029
Level 15
Level 15
‎11-26-2024 10:00 AM

A 1031 exchange is specifically intended for investment or business properties. Personal properties are not eligible

View solution in original post

Reply
abctax55
Level 15
‎11-26-2024 10:05 AM

Rental property for a personal residence - even if a second home - would not qualify.

They would have to rent out that property for a while (the exact time line isn't defined in the IRC).  They could then go wink, wink, nod....well, despite our ORIGINAL intention for this to be a rental property we've decided to make it a personal residence. 

Intent at the time of the exchange is important.

HumanKind... Be Both
Reply
Terry53029
Level 15
Level 15
‎11-26-2024 10:46 AM

The problem with doing that, is you will lose some of your section 121 if you decide to sell the personal residents in the future

Reply
abctax55
Level 15
‎11-26-2024 11:06 AM

True... plus it's a slippery slope (that intent thingy...) 😉

 

HumanKind... Be Both
Reply