Let’s say you bought a property before marriage and you own it in your own individual name. Twenty years later it’s appreciated a lot in value. Now that you’re doing a 1031 exchange, how do you deal with the fact that your non-titled spouse may want to be on the title to the replacement property? The same taxpayer requirement says that the taxpayer that owns the relinquished property needs to acquire the replacement property. All of the exchange funds for that taxpayer need to be used exclusively to purchase that taxpayer’s interest in the replacement property.
This can be a tricky dynamic to deal with during a 1031 exchange. If you want your spouse to be in title with you, it may be best to add cash for that spouse’s proportionate share of the property because your exchange funds need to be used for your proportionate share of the purchase. This is also a question that can be complicated by whether or not you (or the property) reside in a community property state, such as Texas, Wisconsin, etc.
When you have these questions it’s good to surround yourself with a good accountant, attorney, and qualified intermediary.
Talk with a Qualified Intermediary
Talk with a qualified intermediary at CPEC1031, LLC today about your next 1031 exchange today. Our team of skilled intermediaries has been facilitating exchanges under section 1031 of the Internal Revenue Code for more than two decades. We can help you navigate the process and find the answers you’re looking for. Contact us today at our downtown Minneapolis offices to learn more.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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