Yes you can. I have numerous taxpayers who sell a number of relinquished properties with the express purpose of purchasing a much larger replacement property. The key here is to make sure that all of the properties being sold are closed and funded before you have to close on the much more expensive replacement property. Bayview1031 probably does 3 or 4 deals like this a week.
We always recommend that the taxpayer have each sale of a relinquished property as a separate 1031 exchange--this way the taxpayer can identify 3 properties for each exchange, having 1 of the properties identified being the larger desired replacement property. Why do we suggest the taxpayer do each property as a separate 1031 transaction? I know your first thought was so that we could get more fees. NOPE!! The reason we suggest separate transactions for the taxpayer, even though they are purchasing 1 replacement property, is if that 1 replacement property fails to close, the taxpayer will still have the option of transacting a 1031 exchange on the other properties they identified. Instead of 3 properties to possibly purchase as a replacement property, they will have 7 other properties to choose from. This option gives the taxpayer a much better chance of being able to conclude the tax deferred exchange.
Comments