1031 Exchange

[ILLMAS]

TP has a house on the market and his mother just sold a property under a 1031 Exchange and has already identified 2 properties to purchases, they want to know if the mother can buy the son's house under the 1031? Does someone know if this can be done, without breaking any rules?

[cred65]

If the property is sold within two years of the exchange the transaction would become taxable at that time, Sec 1031(f).

[kcjenkins]

It can be done, if the mother is going to be using it as business property, but the fact of the relationship has to be disclosed on the Form 8824. and if the property is sold within 2 years, there are no exceptions to paying tax on the exchange.

[jainen]

>>already identified 2 properties to purchases<<

She can only change the identified properties if she is still within the 45 day period. 1031 is pretty flexible, though. It's okay to add money or mortgage to the deal to acquire multiple properties. I would just recommend she not get TOO creative, like keeping her son as a partial owner or paying more than FMV, but if the property is suitable to hold as a rental she should go for it.