Drop and Swap 1031 Exchange: A Guide for Real Estate Investors
Investing in real estate with partners in an LLC is a popular way to grow your wealth, but it comes with kinks. When it’s time to sell and some of the partners want to cash out while others want to take advantage of a 1031 exchange to continue to defer taxes, what can you do?
Limited liability companies (LLCs) are great in that their income is taxed as "pass-through income" and they can defer capital gains taxes by using like-kind exchanges. However, 1031 exchanges have several governing clauses that determine how exchange transactions work and which LLCs are eligible for 1031 swap transactions.
Since partnership LLCs present significant tax planning challenges forHowever, there's a workaround in the form of the strategy.
