Posted by Nate(DC) on October 10, 2003 at 13:28:16:
#1 (a): Where is the LLC coming from? This is news to me. It sounds like the land is titled in your name, and it should stay that way. If you want the replacement property to be titled in a single-member LLC, I believe the IRS has recently ruled that this is OK. I think John Hyre posted something on this board recently to that effect. Since he is an attorney and I am not, I would have to let him confirm that.
#1 (b): Yes, there is still time to do a Starker exchange. You will need to have the buyer sign an addendum to the contract that this is a tax-deferred delayed exchange. Since this is no cost or impact to him, he should do this no problem. The next step would be to line up the intermediary ASAP. I’d call Starker Services - their phone # is (800) 332-1031 and ask for their fees. You might also want to shop around since fees for this stuff do vary. With Starker Services it will be around $1000 to do the whole thing. William Exeter of Diversified Exchange also posts here sometimes; their web site is http://www.diversifiedexchange.com/. I wouldn’t worry about the fact that the exchange companies aren’t local; the whole thing is done by fax, fed ex, and wire transfer anyway.
2: I believe (I am not a lawyer, so don’t take my word as gospel, it’s just my layperson’s interpretation of the regulations) that non-arms-length transactions (e.g. buying or selling to or from you or a related party - i.e. a relative or a corporation you control) are, if not strictly forbidden, then tightly controlled. You might want to ask the exchange intermediaries for guidance here.
A better strategy might be to start figuring out where you would like to move to; have THAT be your replacement property, rent it out for a year, and then move out of your current house into the new property, converting the “replacement property” to your principal residence and converting the old principal residence to a rental.
Again, this is not legal or tax advice, just ideas from someone who knows a bit about this stuff.