1031 Exchange

[nraa3669]

What is the name of your state?

I purchased a property in 2017 and trying to sell a rental property in 2018.

Can I transfer the 2017 property in my daughter's name and purchase it back through 1031 exchange after I sell the rental property

 

[FlyingRon]

No. If you even look at the form you'll realize this isn't going to work unless your daughter holds the property for at least two years before you "exchange" it. There's going to be a slew of other issues as well.

 

[nraa3669]

Can I purchase a property now adding my daughter, as she would be taking the mortgage and sell the rental within 180 days and then repay the mortgage through 1031 exchange.
The rental is in my name and the new property would be in both the names.

 

[HRZ]

Yes, one can do a reverse 1031 ...but it's also full of rules and your finance method may not fit ...and I'd be real nervous about going from sole ownership to joint ownership without review first with a legal pro on 1031 matters .

Keep in mind that if your sale hits a snag and you miss the 180 day deadline the 1031 falls apart ...and or you just handed your buyer some big levers to improve his side of equation...I've seen some pretty "dumb" deals just because folks focus on taxes not the core investment.

Are you trying to shift assets to your daughter without addressing gift issues ..don't think you can outsmart IRS ..and I just gotta bet 1031s are statistically more likely to get reviewed .

 

[nraa3669]

I am not trying to escape the tax. I really purchased a property in Nov 2017 which if I would have purchased after the rental sale I could have had the benefit of 1031 exchange . But since I cannot to a quit claim and purchase back we intend purchasing a property for my daughter within 180 days time frame with a mortgage. The rental property is in my + spouse's name. If the rental property in couple's name and the new property the couple adds daughter's name, would it be accepted in 1031 exchange. We need to add her name as we are retired and cannot get a mortgage.

 

[adjusterjack]

I am not trying to escape the tax.

Then what, exactly, is it that you want to accomplish, or think you can accomplish, with a 1031 exchange?

If it's not the taxes, then what is it?

 

[nraa3669]

I am planning to purchase and sell and want to know if I could qualify under 1031 exchange

 

[HRZ]

IF the cash flow from the investment does not support the mortgage then there is something else wrong

One of the major practical problems of a reverse 1031 is finding a lender .

One of the few easy tax free exits to gains locked in 1031 for small investments held by much older owners is step up of basis at death

The somewhat flip side being any net operating loss is better on tax return of owner who can make best use of same at his or her marginal tax rate.

I suggest you crunch your numbers a few more times

I suspect adding your daughter's name is not the solution...lender wants economic back up as in additional collateral or income stream ...and a lousy deal does not become better for owners by adding stronger backers ..it merely becomes safer for 3d party lenders ...and I doubt it's your mission to protect banks and commercial lenders .

IF you want to lay out some creative money options on paper..try borrowing from daughter at low end of market rates, mid point of market and high end of market rates ..if daughter can afford to be lender that is .
.that is if daughter can afford to be the lender .

 

[HRZ]

THe rules and discussions of reverse 1031s are multiple places on line ..google is your friend.

IVe done a few 1031s ...but never a reverse one .

 

[LdiJ]

I am not trying to escape the tax. I really purchased a property in Nov 2017 which if I would have purchased after the rental sale I could have had the benefit of 1031 exchange . But since I cannot to a quit claim and purchase back we intend purchasing a property for my daughter within 180 days time frame with a mortgage. The rental property is in my + spouse's name. If the rental property in couple's name and the new property the couple adds daughter's name, would it be accepted in 1031 exchange. We need to add her name as we are retired and cannot get a mortgage.

What do you intend to do with the property? You do realize that you cannot do a 1031 exchange for property that will be a residence of yours? It would have to be another investment property.

 

[adjusterjack]

I am planning to purchase and sell and want to know if I could qualify under 1031 exchange

What I'm trying to get at is why you think a 1031 would be any advantage in buying one and selling another, if it's not a tax issue.

Either I'm dense (don't everybody post at once) or you're not explaining your goals very well.

 

[nraa3669]

I have already invested in the property in Nov 2017 and it is 180 days passed.
If I sell the rental I cannot adjust on the Nov 17 property since it is passed 180 days. I cannot reinvest as I need the cash for my retirement.
I was thinking of the below options which are not valid as per the forum:
1) Quit Claim Nov '17 property to my daughter's name and purchase from her when the rental is sold.
2) Purchase another property on 1031 exchange including my daughter's name.
3) Take more equity on the rental property so that my net reduces and reduces my capital gain.
4) My daughter is living in the rental(not paying rent) and is her primary home for past 4 years. If I add her name to the title would I be able to claim the property as a primary home.
Any other suggestion please.

 

[LdiJ]

I have already invested in the property in Nov 2017 and it is 180 days passed.
If I sell the rental I cannot adjust on the Nov 17 property since it is passed 180 days. I cannot reinvest as I need the cash for my retirement.
I was thinking of the below options which are not valid as per the forum:
1) Quit Claim Nov '17 property to my daughter's name and purchase from her when the rental is sold.
2) Purchase another property on 1031 exchange including my daughter's name.
3) Take more equity on the rental property so that my net reduces and reduces my capital gain.
4) My daughter is living in the rental(not paying rent) and is her primary home for past 4 years. If I add her name to the title would I be able to claim the property as a primary home.
Any other suggestion please.

Why won't you answer our questions? I cannot answer yours until you answer mine.

 

[nraa3669]

What do you intend to do with the property? You do realize that you cannot do a 1031 exchange for property that will be a residence of yours? It would have to be another investment property.

Sorry for not replying to this. The Nov 2017 property would be our primary residence.We have still not occupied the property. Currently we are in the process of selling our primary residence and then occupy the Nov 2017 property as our prime residence.

 

[LdiJ]

Sorry for not replying to this. The Nov 2017 property would be our primary residence.We have still not occupied the property.

Then it cannot be part of a 1031 exchange. There is no method that you can utilize that would allow you to make it part of a 1031 exchange and still eventually live in it. You will just have to except that you will be paying capital gains tax and recapturing depreciation when you sell the rental.