Posted by BRnBA on January 23, 2000 at 13:15:54:
I WOULD be buying them and then Leasing them with the Option to purchase, doing a 1031 when/if they exercise their option. I want to be like Piper and Vesole when I grow up!
Entity Structure Question - Posted by BRnBA
Posted by BRnBA on January 23, 2000 at 12:59:00:
Is it possible to buy properties with the intention of L/O’ing them and doing a 1031x in a C Corp that also does flips or rehabs?
Re: Entity Structure Question - Posted by JPiper
Posted by JPiper on January 23, 2000 at 13:31:52:
I’d be very careful about doing that. I wouldn’t mix your properties if you can help it.
The question has to do with “intent”…the criteria the IRS uses to evaluate whether a property is an investment property or not, and therefore eligible for 1031 exchange. If you’ve got the property in an entity where you’re also flipping…then a question about your “intent” may arise.
As you know, if you are a dealer you are not eligible for a 1031 exchange.
My CPA tells me that I can hold properties in an entity and flip them as well, without a problem. But I think in general the best strategy is to separate your properties.
As always, I’m not a CPA or tax lawyer.
JPiper
Re: Entity Structure Question - Posted by Ed Garcia
Posted by Ed Garcia on January 23, 2000 at 13:04:46:
BrnBA:
NO.
The reason being, is that with a lease option you do not own the property, you only
control it. In order to do a 1031, you must have ownership.
Ed Garcia
Re: Entity Structure Question - Posted by BRnBA
Posted by BRnBA on January 23, 2000 at 13:27:42:
Ed, I am purchasing and then selling via L/O.