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Daily Archives: October 24, 2017

What Is A “Drop And Swap” In A 1031 Exchange?

What Is A “Drop And Swap” In A 1031 Exchange?

When real property is held by a partnership or limited liability company, often disagreements can arise among the partners as to how to handle net proceeds when the property is sold. Some investors want to conduct a 1031 exchange while others simply want to sell for cash. When competing interests are in play, how can everyone be satisfied? One answer is what is known as a “drop and swap.” In such a transaction, before the exchange the property ownership title is changed to reflect individual partner names and their partitioned interests rather than the partnership or LLC itself. This title change is the “drop.” Thereafter, the exchange occurs and some […]