How does 1031s work with a joint venture to develop that property? Does the owner qualify?
If the original property was sold into the JV, does the owner of the property that invested that money into the JV qualify for a 1031 tax deferment? If so does the full amount need to be put in to qualify for 1031s?
[{"id": "h2y39z2", "text": "The joint venture\u2019s ownership entity needs to be structured with fractional tenancy in common entities in order to qualify if all members do not intend to participate in the 1031 rollover together. \n\nhttps://www.ccim.com/cire-magazine/articles/irs-provides-guidance-using-tenancy-common-interests-1031-exchanges/", "replies": [], "depth": 1}, {"id": "h2yc46h", "text": "Generally, the best answer to a 1031 question is: Consult a Qualified Intermediary.\n\nIf the joint venture is not itself an entity, but some sort of general partnership, then generally the property will be titled as a tenancy in common. If the joint venture is itself an entity separate from its owners, then the joint venture would have to do the 1031, or the joint venture would have to distribute the property (before the sale) so that it becomes titled as a tenancy in common and then the owner would be able to 1031 their fractional tenancy in common interest.", "replies": [], "depth": 1}, {"id": "h2ylcgg", "text": "This isn't the answer to your question: but why wouldn't the owner of the land create a JV retaining partial ownership of the entire development? I'm not a QI, CPA, or attorney, but it seems to me that if you're not taking any cash and you haven't sold anything then it wouldn't be taxable until the project was sold.", "replies": [], "depth": 1}, {"id": "h30mzsg", "text": "Trying to understand the details of the question. Are you saying one partner contributed a property and another contributed cash, then that property was sold at a later date, could the cash contributing partner participate in a future 1031? If you intend on continuing the JV with a replacement property, then the answer is yes. If the partners want to go their separate ways, then a \u201cdrop and swap\u201d transaction needs to take place. Googling drop and swap will do a better job than me trying to explain.", "replies": [], "depth": 1}, {"id": "h3bvp7q", "text": "You have 2 options. \n\n1: You could take the tax hit and invest in the JV and take the upside, which will be better in the long run.  \n\n2: I believe you could contribute the property to an entity that will in turn give you shares. Not 100% sure on that, but I\u2019ve heard of it before. \n\nI believe you\u2019d have to reinvest the full amount to qualify for a 1031.", "replies": [], "depth": 1}, {"id": "h51j76h", "text": "Here\u2019s what I think you\u2019re asking:\n\nOwner 1 owns a piece of land. They sell that land into a partnership, where they own X% and a developer partner, let\u2019s call them Owner 2, owns Y%. The goal is for the two owners to put a building on the land.\n\nIn this case, I don\u2019t think there will be a way to 1031 the land into the development project.\n\nThe right structure to do a 1031 is a TIC, where Owner 1 and Owner 2 each own a portion of common property. But in order to create that structure, Owner 1 needs to sell a TIC interest to Owner 2. That would create a capital gain that Owner 1 could 1031 into *another* property.\n\nThe other way would be to sell the land to a partnership entity that is -co-owned by Owner 1 and Owner 2, but that transaction could not be a 1031 because it is self dealing, which is prohibited.", "replies": [], "depth": 1}]