What if a taxpayer sells investment property individually but wants the 1031 replacement property titled in a trust? Will they still be able to qualify for 1031 exchange treatment?
The Same Taxpayer Question
The key question we need to answer here is whether the person conducting the 1031 exchange and the trust are treated as the same taxpayer for federal income-tax purposes.
A grantor trust may be treated as the individual owner for tax purposes. A non-grantor trust may be a separate taxpayer. That essential difference can determine whether the proposed title creates a same-taxpayer issue.
Before the replacement property closes, it’s important to confirm the trust’s tax treatment with your tax and estate-planning advisors. As we often discuss, a successful 1031 exchange requires a strong team of advisors that consists of a qualified intermediary, CPA/accountant, lawyer, financial planner, and more. Be sure to loop all of these advisors into the process so that you are set up for success.
Section 1031 of the IRC
When you do a 1031 exchange of your investment real estate, you can defer capital gains taxes and compound your hard-earned wealth over time. Savvy investors utilize section 1031 of the Internal Revenue Code to complement their long-term wealth-building strategy. Any investor can conduct a 1031 exchange as long as their property qualifies. At CPEC1031, LLC we help investors large and small facilitate exchanges of all types. Reach out to our team today to set up a time to speak with a qualified intermediary about your next like-kind exchange under section 1031 of the IRC.
-
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2026 Copyright Jeffrey R. Peterson All Rights Reserved