We have a client that after 20 years of owning & managing a few rental propreties, he sold (exchanged) them for residential TIC's. One was a duplex, sold (cash out) 715,000 which he properly parked with an intermediatary. The funds were all invested in three separate properties - no cash to the T/P. I have a question about 1031 exchanges where part of the funds go into reserve accounts for repairs or to set up leasing management companies.
Approximate nunmbers:
Equity Investment 150,000
Escrow closing fees 10,000
Property Taxes & Insurance 5,000
Cash reserve for repairs 25,000
Funds used to set up leasing company 10,000
Total pruchase price 200,000
The Taxes & Insurance are boot. I think that since the Cash Reserve is not for a specific item, it too may be boot.
The leasing company handles only this one property. It actually leases the whole complex from the investors, then rents the individual units to tenants thru a third party property management company. Does the leasing company & cash reserves qualify for "like-kind" treatment?
This property is a DST with no partnership return or K-1.
Thanks, Mike
Approximate nunmbers:
Equity Investment 150,000
Escrow closing fees 10,000
Property Taxes & Insurance 5,000
Cash reserve for repairs 25,000
Funds used to set up leasing company 10,000
Total pruchase price 200,000
The Taxes & Insurance are boot. I think that since the Cash Reserve is not for a specific item, it too may be boot.
The leasing company handles only this one property. It actually leases the whole complex from the investors, then rents the individual units to tenants thru a third party property management company. Does the leasing company & cash reserves qualify for "like-kind" treatment?
This property is a DST with no partnership return or K-1.
Thanks, Mike
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