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Posted by Kyle on August 10, 2007 at 24:02:20:

I'm under crunch right now and need to figure out a solution really quickly.

We just sold our rental for $400k with $200k in debt and $200k cash waiting to be reinvested. The title was held in both of our names as husband and wife. I'm contemplating on a land development project where the developer pulls in investors as syndications. An LLC is formed for the project (for example, Autumn Park LLC), where each investor will be granted certain number of shares. Can I do 1031 into the LLC? The other complication is that the investments the developer pulls in are typically all cash so there's no debt position. How do I satisfy the debt requirement of the 1031? Any options to make the 1031 exchange work?

My time is running out in about a month as the 45 day deadline is approaching. I will consult the QI company attorney, but would love to hear if this great community of investors have any creative ideas. Thanks in advance! - Kyle

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Posted by Rich-CA on August 10, 2007 at 19:05:10:

I disagree with the post that 1031 s are not simple. I have done several and the rules are fairly straightforward.

The issue with an LLC is: is ownership organized as Tenants In Common and do they already own the land. A tenants in common (TIC) investment is an acceptable exchange, but you should ask your exchange agent to be sure that this particular deal qualifies.

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Posted by JOHN HASLACH, CPA, MST on August 15, 2007 at 10:56:34:

They're so simple I have seen professionals blow them! If you are willing to accept the liability, Kyle, that is good advice to give!

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Posted by JOHN HASLACH, CPA, MST on August 10, 2007 at 05:54:33:

You cannot 1031 real estate into a LLC interest. 1031s are not simple. You should be dealing with qualified professionals.