1031 Alternatives for back to back escrow deal

[Noa Zell]

Are there any good alternatives to a 1031 exchange for a back to back escrow deal, since the property in question will never be under my name? I have an option to purchase at an attractive price but would rather not bring cash to the transaction. I am looking to secure a buyer and close with both parties in escrow. How can I avoid capital gains tax if at all?

Any first-hand information on DSTs of 731s would be helpful, or any other creative ideas that could make this deal profitable.

[Noa Zell]

Note that the property is a commercial property

[Bill Brandt]

Nope. You aren’t going to convince the irs you bought a property as an investment if you sell it the same week. They’re going to call you a “dealer” and count your real estate as inventory. You’re going to face the maximum taxes possible. State and federal and maybe self employment. 

You alternatives are hold for a year to only pay capital gains tax. Move in to it and fix it up and stay there for 2 years to be tax exempt. Anything less than a year is penalized. 

Ps. Ignore the move in I see your second post saying commercial. So hold for a year and fix it up would get you down to just capital gains tax. 

[Noa Zell]

Quote from @Bill Brandt:

Nope. You aren’t going to convince the irs you bought a property as an investment if you sell it the same week. They’re going to call you a “dealer” and count your real estate as inventory. You’re going to face the maximum taxes possible. State and federal and maybe self employment. 

You alternatives are hold for a year to only pay capital gains tax. Move in to it and fix it up and stay there for 2 years to be tax exempt. Anything less than a year is penalized. 

Ps. Ignore the move in I see your second post saying commercial. So hold for a year and fix it up would get you down to just capital gains tax. 

Thank you Bill!

[Dave Foster]

@Noa Zell, The 1031 is out because your intent is not to hold for productive use.  And no go on capital gains tax either.  You'll pay ordinary income tax.