Same Taxpayer Requirement

In a successful 1031 exchange, the taxpayer who sells the relinquished property must be the same taxpayer who acquires the relinquished property. This is often referred to as the “Same Taxpayer Requirement.” Thus, if husband and wife sell the relinquished property, then husband and wife must acquire the replacement property. If the relinquished property is sold by a legal entity, such as a corporation, LLC, or partnership, then that same corporation, LLC or partnership must acquire the replacement property.

Note that a “disregarded entity” in the form of a single-member limited liability company is also considered to be one in the same as the taxpayer.

In the event the taxpayer owns property with others as tenants-in-common (TIC), each TIC owner is deemed to have an undivided, individual interest in the property. A taxpayer doing an exchange may sell his or her undivided interest without regard to the actions of the other tenants-in-common.

Strategic 1031 Exchange Advisors, LLC, a Georgia limited liability company, is a qualified intermediary for 1031 exchanges only. It is not an accounting firm, law firm or registered investment professional and therefore is not qualified to give accounting, tax, legal or investment advice, and, further, cannot act in an agency capacity on behalf of its clients. This website is for informational purposes only and does not and is not intended to constitute accounting, tax, legal or investment advice. We advise you to consult with your accountant, attorney and investment professional on all matters related to your exchange.