1031 exchange using single member LLCs

Hi how are you?

I have one question for which you may have many similar cases.

 

I sold the apartment in NY which was held by "H Enterprises LLC", a NY LLC.  Now I want to purchase three properties in FL, and I understand they have to be purchased by "H Enterprises LLC".

 

The local banks here says that I have to create Florida entity to borrow money from banks.  So I have to incorporate "H Enterprises LLC" a FL LLC.

 

Do you think I will be all right regarding the 1031 exchange?  I am sure there must have been similar cases that your firm might have dealt with regarding the inter-state, trans-state transactions including LLC.   I would highly appreciate your advices regarding this question.

 

Thank you very much,

Best regards,

 

Dear T:  Single member LLCs are sanctioned by most states.  I gather that two of those states are NY and Fl.  Although sanctioned under state law, the IRS has ruled that you can treat them as disregarded entities for income tax purposes.  What this means is that you can sell in one single member LLC and purchase in another sing;e member LLC and, because both are disregarded entities your 1031x is valid.  What it also means is that you can sell in your single member LLC and buy in your indiviual name if that works better for you.  Finally it also means that the LLC does not have to have a tax ID number, does not have to file a tax return and that all the tax incidences of ownership and sale can, instead, be reported on your individual tax return.  I can cite the tax autority is support of what I am telling you if you need it.  I believe this should simplify your life considerably.  Sincerely,

Steve Hickox
Attorney / President