1031 Transaction May Be Complex - Any Help?
I am in contract now on a home, it will be a cash purchase. I want to vest title to this property in a new LLC. I have another rental and want to do a reverse 1031 to the replacement property. The relinguished property has a mortgage and title is vested in a trust, not the new LLC.
What are the title issues?
Should I change title on the relinquished prop before the COE on the replacement property?
Will I get hit with mortgage boot since the relinguished property has a mortgage?
What if I payoff that mortgage before COE on the replacement property?
Any input is greatly appreciated!
Seems to me the clean way is to set all titling details up front. Lots of possible questions - for example is the trust a living or revocable one.
Mortgage boot will depend upon all tranaction details including basis as it compared to loan balance. You need to either be or find a tax expert who can advise. You need to know up front that there are as many ways of handling a 1031 as there are accountants. You may find as many different answers as books and articles and people you talk to.
Expect to spend several hours searching the web for articles and forms for calculating all the details. That is just to prepare for talking to a CPA and/or legal counsel. Ask around to find an experienced person or firm who has done exchanges. Ask at your local intermediary firm, at the title company, a commercial RE Broker, etc.
Adam Skarsgard w/ North American Exchange is near you. Ask him. 415-559-8810
[ Edited by pmatheson1 on Date 03/09/2004 ][ Edited by pmatheson1 on Date 03/09/2004 ]