Can I Buy a Piece of a Property as Part of My 1031 Exchange?

This question can take many forms. The most common are as follows:

• I own property together with another party. I'm in the middle of a 1031 tax deferred exchange. Can I identify and buy the 50% of the property that is owned by the other party as part of my 1031 tax deferred exchange so that I now own 100% of the property?
• There is a small group of friends that want to buy property together. We would each end up owning about 20% of the property. Can I identify this 20% and buy it as part of my 1031 tax deferred exchange?
• I attended a seminar on buying/investing in tenant-in-common investment properties where I would buy a fractional interest in a large commercial property. Does this fractional interest qualify as replacement property for part of my 1031 tax deferred exchange transaction?

The answers is yes to all of these questions.

The requirement is that the investor who sold real estate through a 1031 tax deferred exchange must also acquire like-kind real estate as his or her replacement property in order to complete a successful 1031 exchange. The replacement property does not have to be 100%; a fractional interest will qualify with no problem.

Your professional 1031 tax deferred exchange Qualified Intermediary can help you identify a fractional interest in real property when you are completing your identification form during your 45 day identification period.