Transferring shares to a partnership...

Can I buy a share of the new property then immediately transfer my share?

I know I cannot sell the old property in my name, and then turn around and buy a share of a partnership. But, can I buy a share of the new property in my name, and then immediately transfer my share of the land to the partnership?

No. Section 1031 requires that you sell real estate and buy real estate. If you buy a partnership interest, that is not considered real estate. If you buy real estate, and then transfer your share of the real estate to a partnership, the IRS may connect the two transactions together. Therefore, arguing that you, in effect, bought the partnership interest which would disallow the exchange. Your best bet is to wait a year and a day before you transfer the real estate to the partnership.

--The Experts

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