Selling 2, buying 1...

Can I sell two properties, and then only buy one new property to complete my 1031 exchange?

Yes, you can. In fact, this is a good strategy for reducing your management hassles by consolidating your investments. This may also make sense if you want to sell a few smaller properties in order to finance one more expensive property.

Likewise, you can sell one property and buy multiple new properties. This strategy is good for diversifying your investment risk either geographically or by property type. For example, you can sell your old property, and then buy 3 separate properties -- a rental house in Florida, bare land in Colorado and a commercial condo in New York. Diversification can also improve your leverage and cash flow potential.

--The Experts

I read something in Tee-Shots that I have a question about: you said I can sell two properties and buy one, but what if the properties I'm selling are in two different entity names? I know that if I'm using two different entities, whichever entity sells is the one that has to purchase the new property (one is owned personally and the other is owned in a corporate name). Can I still just buy one property with the money?

Thanks for your reply,
Keren

Great Question!

The trick is that you are really completing two exchanges, by two separate taxpayers (you and your corporation). What this means is that you have to acquire the new property in two pieces, one piece for each taxpayer. You and your corporation each receive title to a percentage of the new property corresponding to the value of property sold by each.

It's also important to remember that each sale has its own time deadlines, investment requirements, etc., so you should work closely with your qualified intermediary to ensure that all the pieces of the exchange can be properly structured.

Call us if you have anymore questions about this at 866-694-0204, or email us at ask@expert1031.com.

Thanks!
--The Experts