Can a seller put the proceeds of a tenancy in common share sale in a 1031 tax-deferred exchange?
Each tenants in common share sale can be treated as a separate transaction for the purpose of calculating capital gains tax, and the proceeds from each can be placed in a 1031 tax-deferred exchange. Alternatively, several TIC sales can be grouped together for exchange purposes provided they occur at the same time or within a relatively short period. But if you provide seller financing for the sale, the amount of this financing will be considered taxable boot unless you take precautionary measures. If such measures would be impractical under your financial circumstances, you can often achieve a favorable tax result by using installment sale tax treatment. Another alternative to a 1031 tax-deferred exchange might be a private annuity trust or “PAT”. Consult you tax or financial advisor for further information on these issues.
Related Questions
- Can a couple convert to a tenancy in common and, as a result, leave their share of their joint property to someone other than their spouse (e.g. their children)?
- Can a seller put the proceeds of a tenancy in common share sale in a 1031 tax-deferred exchange?
- What are the accounting requirements for exchange allowances or proceeds of sale?
