In a 1031 exchange of real estate involving multiple co-owners, for each co-purchaser/exchangor you will want to make sure that their percentage interest is sufficient to satisfy their Value, Equity and Debt accounting requirements in a 1031 exchange.
3 Guidelines for Deferring All Your Gain
There are three general rules of thumb to quickly see if you will defer ALL of the recognition of gain.
Typically you will acquire replacement property that is “up or equal” in Value* (price); {*net of sales commissions and customary transactional expenses}
You will roll over all of your Equity (net proceeds) from the relinquished property into your replacement property.
And to the extent that you were relieved of liabilities and Debt, such as mortgages on your old relinquished property, the debt relief is offset by (1) new liabilities or mortgages taken on in conjunction with your purchase of the replacement property; OR (2) by investing additional cash in the replacement property equal to the amount of liabilities and debts that were discharged.
You can have a partial tax deferral if you miss these general benchmarks. As always, it’s a good idea to talk with your CPA or tax accountant about this.
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Start Your 1031 Exchange
If you have additional questions about exchanging property involving numerous owners, reach out to CPEC1031 today. Our qualified intermediaries have over twenty years experience facilitating exchanges of all shapes and sizes. Contact us today to learn more about how we can help with your 1031 exchange!
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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