Partners who want different things at the closing table.
The partnership owns the property, not the partners — which is why a group that wants to split up has to plan long before the sale.
Exchanging out of a partnership or LLC
The taxpayer who sells must be the taxpayer who buys
Title and tax reporting have to line up on both sides of the exchange. That is what trips up partnerships and multi-member LLCs.
Partnership interests are not like-kind
You cannot exchange an interest in an LLC or a partnership. The exchange has to be of the underlying real property.
A drop and swap takes time
Converting to tenancy-in-common so owners can go separate ways is done well before the property goes under contract, not during escrow.
Three steps, and we carry most of them
Call before you close
We confirm an exchange fits, map the deadlines against your timeline, and put the exchange agreement in place before the sale closes.
We hold the proceeds
Funds go from the closing table to us, never to you. That is what keeps the deferral intact.
You buy, we close it out
You identify and negotiate the replacement property. We handle the documentation, the funding and the reporting trail.
1031 Specialists
The common version of this: four owners, two who want to cash out and two who want to keep deferring. There is usually a way to do it, but it is a structuring conversation with your CPA and attorney months ahead of closing, not a closing-week fix.
We are a qualified intermediary for IRC Section 1031 tax-deferred exchanges, facilitating exchanges for real estate investors in all fifty states. We handle the exchange agreement, the identification and closing deadlines, and the custody of exchange funds. Every exchange includes unlimited tax optimization consulting, audit protection and an attorney guarantee, on a simple flat fee you pay at close.
Exchanging out of a partnership or LLC, answered
Can some partners exchange while others cash out?
Often yes, but the structure has to be in place well before the sale. Raise it early rather than at the closing table.
Can I exchange my LLC interest?
No. Partnership and LLC interests are excluded from Section 1031. The exchange has to be of the real property itself.
What is a drop and swap?
Distributing the property out of the entity to the owners as tenants in common, so each can exchange or cash out individually. Timing and documentation are what make it hold up.
Talk to someone before the clock starts
Reach me directly, or call the main line and ask for anyone on the exchange team.
Main line
(631) 438-1031General email
info@1031specialists.comMailing address
30262 Crown Valley Pkwy, Suite B 464Laguna Niguel, CA 92677
The information on this page is general in nature and is not tax or legal advice. 1031 Specialists is a qualified intermediary, not a law firm, accounting firm or investment adviser. Consult your own tax and legal advisors about your circumstances before entering into an exchange.