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RCZ
Level 1

Sale through 1031 exchange of half interest of commercial rental property - how to report

I owned a commercial rental property  in a single member LLC.  During the year I sold a 50% interest in the commercial property to another person and took  the proceeds and did a 1031 exchange with the proceeds into another  commercial rental property.  The other  person and I now hold the original property as tenants in common, each holding a 50% title interest.  How  do I report that sale and how do I adjust the property worksheet and depreciation for a partial disposition of the original property.  All the forms and the  turbotax program talks about is complete disposition of property -  not partial.

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tagteam
Level 15

Sale through 1031 exchange of half interest of commercial rental property - how to report


@RCZ wrote:

I hope this helps understanding of what happened.  


Yes, but getting a transaction such as this one entered into TurboTax is the issue. If it can be done at all, it will almost certainly require entry via Forms Mode and, possibly, overrides (which preclude e-filing).

 

Frankly, you should seek guidance and, optimally, return preparation from a tax professional. 

View solution in original post

3 Replies
tagteam
Level 15

Sale through 1031 exchange of half interest of commercial rental property - how to report

It is almost unfathomable as to what type of transaction actually occurred.

 

Were you in receipt (constructive or actual) of any cash from the transaction?

 

Did you use a QI (Qualified Intermediary) or some type of exchange facilitator? 

 

The relinquished property typically needs to be relinquished (i.e., no interest is retained) in order to have a valid exchange under Section 1031.

RCZ
Level 1

Sale through 1031 exchange of half interest of commercial rental property - how to report

This was a commercial sale, handled through a national QI that received $375,000 from the buyer of Title to a 50% tenant in common interest in the relinquished property at the closing on the sale - I received nothing.  I retained no interest in the buyers 50% title interest.  The QI then applied these funds (less fees) towards the acquisition of an 81.5% interest in another tenant in common commercial rental property, all within the requisite time frames.  The QI indicated no problem with the 1031 exchange of the 50% title as a valid relinquished property.

 

I hope this helps understanding of what happened.  

tagteam
Level 15

Sale through 1031 exchange of half interest of commercial rental property - how to report


@RCZ wrote:

I hope this helps understanding of what happened.  


Yes, but getting a transaction such as this one entered into TurboTax is the issue. If it can be done at all, it will almost certainly require entry via Forms Mode and, possibly, overrides (which preclude e-filing).

 

Frankly, you should seek guidance and, optimally, return preparation from a tax professional. 

View solution in original post

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