Partnerships are great for buying and owning property. But partnerships can be awful when you want to sell property.
If you’re in a partnership and are thinking about selling property in a 1031 exchange, it might be a good idea to reconfigure the ownership into a tenancy-in-common before even listing the property for sale. That breaks everyone out into separate ownership. It’s also a good idea to negotiate with your bank at the very beginning of the process that they will consent to their collateral being reconfigured into a different ownership structure.
If a partnership owns a piece of property it is the entity that’s the most qualified to conduct the exchange. If everyone in the partnership votes unanimously that they’ll stay together and do the exchange at the entity level, then things will be fine. But quite often, it’s not that simple and partners want different things. This is why it’s important to consult with a real estate attorney early in the process to discuss the available options for splitting up the property in a way that will benefit everyone involved.
Make a Plan for Your Next 1031 Exchange
Make a plan for your next 1031 exchange of real estate by contacting the qualified intermediaries at CPEC1031, LLC. Our team has more than twenty years of experience facilitating exchanges that run the gamut from small and simple to big and complex. We can put our experience to work for you by helping you defer your capital gains taxes on the sale of investment real estate in a 1031 exchange transaction. Contact our team today to learn more about the benefits of section 1031 and how you can get started with the process.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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