Tenancy in Severalty refers to a type of ownership where a single individual or entity holds the entire ownership interest in a property. This means that the owner has complete control over the property and can sell, transfer, or use it as they see fit.
Key-Takeaway
- Tenancy in Severalty refers to a type of ownership where a single individual or entity holds the entire ownership interest in a property.
- In a 1031 exchange, the owner can exchange the property for another similar property, deferring the payment of capital gains taxes.
Example
Suppose an investor owns a rental property as a tenancy in severalty. In a 1031 exchange, the investor can exchange the property for another similar property, deferring the payment of capital gains taxes on the sale.
Tips
- Consider the tax implications of a tenancy in severalty ownership structure in the context of a 1031 exchange.
- Consider the ease and flexibility of decision-making and property management in a tenancy in severalty arrangement.
Advice
- Seek the advice of a tax professional or real estate attorney to ensure that your tenancy in severalty arrangements meets the requirements of the tax code for a 1031 exchange.
- Be aware of the responsibilities and liabilities associated with sole ownership of a property.
Recommendations
- Properly structure your tenancy in severalty arrangements to maximize the benefits of a 1031 exchange and minimize the potential drawbacks.
- Regularly review your tenancy in severalty arrangements to ensure that it continues to meet your investment goals and 1031 exchange requirements.
- Consider alternative ownership structures, such as a limited liability company (LLC), that may offer more protection and flexibility in a 1031 exchange.
