Answer
Feb 13, 2025 - 11:30 AM
Yeah, just to be clear, yeah, on the DST, so if you invest in a DST in a 1031 exchange, we as a general rule, we want to see that the title or registration of ownership of your replacement property is the same as the property you sold. But you don't want to change ownership midstream when you do an exchange. Having said that, a single member LLC, sometimes can be an exception to that rule because if you are using the same, if you're using your own social security number for your single member LLC taxes and essentially it's the same taxpayer and the name of the LLC is really just a superficial formality at the end of the day. You and your LLC are the same entity for tax purposes. Most CPAs would say, yeah, you could actually do that exchange and just put the replacement property in your name and then not worry about your single member LLC. I'm not gonna give tax advice on that. So unless someone tells us otherwise, we always make sure that the paperwork has your replacement property titled exactly the same as your relinquished property. And that's just to comply with avoiding the red flags that the IRS is looking for when they audit your 1031 exchange. But if you have an LLC and it's only purpose was to hold the rental property and you sold that rental property, the next year, we can easily dissolve that LLC, we can re-register that DST interest into your name. So you're not stuck holding that DST forever in the name of an LLC or a partnership that now you're stuck with maintaining. That's not the point. You just need to complete the exchange with that entity. Down the road, it's really quite easy and routine for us to re-register now sort of defunct LLCs and partnerships into your name or your living trust.
