1031 question - Posted by Tim

Posted by William L. Exeter on November 12, 2006 at 17:40:09:

Yes, it qualifies for 1031 exchange treatment. It’s done all the time, and is a great structure for today’s market.

1031 question - Posted by Tim

Posted by Tim on November 12, 2006 at 10:18:36:

There’s a few different duplexes / 4-plexes that I’m interested in. I have other properties that I could sell.

Here’s my idea:

I offer to buy this 4-plex for $160k as a lease option. I’d give $5k for the option, and lease it for up to 12 months for say $1,500 per month (I own an identical building next door, and I get about $2k per month in rent). If I don’t close before the 12 months are up, he keeps my $5k. If we do close, I’d get my $5k back, and he’d get his $160k.

During that 12 months, while under my lease option, I put a few of my single family houses up for sale. Once I sell one of them, I put the cash proceeds with a qualified intermediary, then secure financing for the 4-plex, and close within 180 days.

I realize that I could sell one of my houses, put the cash with a QI, then go looking for a replacement property. I’d rather identify the replacement property, get an option, then decide which property to sell.

Has anybody done something like this? Would it qualify as a 1031 exchange?