Can I 1031 To Family Member W/land Trust?
1. Son sells a rental property as a 1031 on 8/3 250K
2. I sell to son one of my rental props on a land trust so that the mortgage stays in place as a 1031. 251K
3. I buy new property 320K
Anything tricky about the land trust idea? The goal is to keep the mortgage in place.
All feedback appreciated. Must decide this week. Thanks.
In a 1031 exchange, the titled owner of the relinquished property and the titled owner of the replacement property must be the same. How will you make this work with a land trust?
Secondly, all of the proceeds from the sale of the relinquished property must be reinvested in the acquisition of the replacement property. How will this work in your scenario?
1. Son is titled owner of A, selling for 259K - 25K of concessions. Net 75K, he would take NO boot.
2. I am titled owner of B, would sell to him for 260K - 25K of concessions. Has mortgage of 140K on it in my name. Thought it might be better to keep it in place for now. He would have to add a little cash to the deal. ** If he does not have to do a land trust to keep mortgage, then what can be done to keep the costs of a new mortgage out of this scenerio?
3. I am under contract to purchase a new construction home as investment for 310K, requiring large down payment.
I would like to take this opportunity to move this property (B) to my son. He did all of the rehab work last year on it, so the value was gained by his work. I consider it his home for estate planning reasons, but legally it is not at this time.
Again, any suggestions, feedback appreciated.
Quote:
On 2006-07-31 02:43, DaveT wrote:
In a 1031 exchange, the titled owner of the relinquished property and the titled owner of the replacement property must be the same. How will you make this work with a land trust?
Secondly, all of the proceeds from the sale of the relinquished property must be reinvested in the acquisition of the replacement property. How will this work in your scenario?
1031 Exchanges are done all the time with a land trust. I suggest that you contact Carl Tully at Heritage Group 1 (800-767-1031), an IRS qualified 1031 Exchange intermediary to get the straight info from the best in the business. He has been in business since 1980. However, if the price of documentation is your major concern, Carl will be the first to tell you that you should look elsewhere. His services are more expensive than most others, but his Docs are the best. Nobody does better work!
Good luck.
Wiz
a non-lawyer
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Wiz, Thank you for the information; I will consider. Question for you. Since you recommend land trusts as inexpensive, why do you suggest someone who is expensive? Is it because of the potential problems of family 1031 land trusts?
Also, I have read on this site that a mortgage can not be called it a parent sells to an offspring. Am I remembering correctly?
Hi ce,
"I have read on this site that a mortgage can not be called it a parent sells to an offspring. Am I remembering correctly?"
Yes. The www.Garn-St.Germain Act o f 1982 not only exempts land trusts from the DOSC, it also exempts:
(6) a transfer where the spouse or children of the borrower become an owner of the property;
Land trusts ARE inexpensive. I recommended this man because he is THE expert on 1031 exchanges, whether or not you are using a land trust. There are no problems unique to land trusts and the 1031 exchange of which I am aware.
Wiz
not a lawyer
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Bill,
Thanks for an excellent analysis.
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