While the above information has been researched and considered reasonable and correct, 1031 crowdfunding is not lawyers or tax specialists. It is important to consult a licensed tax professional about your personal tax situation. Again, if you are planning to follow this path, it is important to do your due diligence in advance. In particular, you should learn about the IRS Revenue Ruling 2002-22, which has set out a set of guidelines that qualify an ICT replacement agreement 1031. With respect to Shawn R. Wamstad`s deferred tax exchange and regular leases, there was considerable uncertainty prior to the award of the proceedings as to whether certain agreements involving the co-ownership of tic interests in real estate constituted corporate interests expressly excluded from section 1031 tax benefits. Patchwork jurisprudence and the lack of clear IRS rules have made many exchangers nervous about acquiring ICT shares as alternative buildings, that their exchanges are classified as swaps of commercial interests and thus invalidated by the IRS. However, as has already been mentioned, there are times when there is a seller who wants a stock market but wants to invest in several properties (each with a different lender) and wants to attract new investors. To prevent many tenants from being associated together with the financing process and documentation, as well as to preserve the privacy of investors, this type of seller may not want to use the ICT structure. In these cases, we have structured transactions in which a 1031 seller has formed one or more new ad hoc vehicles “not taken into account” to take over ownership of the replacement or replacement property held 100% by seller 1031.
At the same time, the selling entity has amended its partnership or other ownership agreement to add additional partners/owners to the existing distribution company, with each group of investors being a particular category of partners with limited economic rights and benefits to a property in which they have invested. This type of structure has certain advantages: previously, the IRS had stated in income procedure 2000-46 (12 October 2000) that it was no longer making a preliminary decision on the interest of an undivided (fractured) tenant in the common interest of real estate for an entity eligible for tax exchange treatment under Section 1031. The IRS was concerned that taxpayers would feel that certain plans in which they purchase tenants in common interests in real estate may constitute a participation in an entity classified as a federal tax corporation. The 2000-46 revenue procedure has been repealed. A copy of the 2002-22 income procedure is attached. Outgoing members are informed of their respective group interests in the property. The property sold with the LLC executing the 1031x. For their part, the new co-owners of the property collect and recognize income tax (paying). This solution causes problems if the sale does not pass. As you can see in the above, an ICT agreement is a very simple and useful tool for conducting a tax exchange with several parties, each wishing to conduct its own exchanges.
However, they must meet different conditions to qualify for the Exchanges under Section 1031. Therefore, these documents should be carefully developed and verified by appropriate legal and tax advisors. However, these tax restrictions can sometimes allow investors to pause before entering into such an agreement, even if tax deferral is taken into account. In this case, it may be appropriate to discuss a possible alternative structure, as described above, that could better meet the needs of investors.