Co Owners Who Disagree Are the Most Common Way a 1031 Exchange Fails, Start An Exchange Says
RENO, NV – October 13, 2026 – When two or more people own an investment property together and one of them wants cash while another wants to keep deferring tax, the decision that settles it is usually made too late to help either of them. Start An Exchange, the tax deferral consultancy behind startanexchange.com, argues that co ownership belongs in the first conversation about a sale rather than the last, because the structure that separates the owners has to be in place before the property transfers.
Where Co Ownership Breaks a Deferral
A 1031 exchange defers tax when real property held for investment is exchanged for other real property held for investment. An interest in the partnership or limited liability company that owns the building is not real property, so a partner cannot exchange their share of the entity. The entity owns the asset, which makes the entity is the only party positioned to exchange.
That is a technical point with a very practical consequence. A partnership cannot simultaneously cash out one owner and run a deferral for another. Where the owners want different outcomes, somebody has to change who the taxpayer is, and that change ideally happens before the property is under contract.
The Structure Advisers Call a Drop and Swap
The common answer is to distribute the real estate out of the entity to the owners as tenants in common, after which each owner is free to exchange or to sell and pay the tax. Practitioners call it a drop and swap, and it is well established and widely used.
It is also the structure most likely to attract scrutiny, because the shorter the interval between the distribution and the sale, the more the arrangement can be characterized as the partnership having exchanged. Start An Exchange takes the position that the honest thing to tell a co owner is that there is no statutory holding period that makes it safe, that advisers genuinely disagree about how much runway is enough, and that the risk falls as the gap widens. The firm declines to quote a number it cannot support.
Options for the Partner Who Wants Out
The firm’s argument for raising co ownership early is that an owner who wants out is not limited to taking cash and paying the tax. It places 17 tax deferral strategies for real estate, among them Delaware Statutory Trusts, deferred sales trusts and opportunity zone funds, each with its own page on its website.
That range is the point the company has made consistently since it began publishing. As one of its own posts puts it, “Most companies offer one ot two options. We offer 20.” Another states its position on the mechanics plainly, that “The rules of the 1031 exchange are pretty basic.” The firm describes itself in both as working across the country, saying “We are nationwide educators on the subject of tax deferral.”
Applied to a co owned building, that menu changes the shape of the conversation. A retiring owner now has options that produces income without forcing the remaining owners to abandon their exchange, which is a different negotiation from one where the only choices are sell and pay or hold and wait.
The Limits the Firm States Plainly
Start An Exchange is not a law firm or an accounting practice and says so in its own published material, and it does not give opinions on specific partnership agreements or state law questions. Its role is the exchange structure and the range of deferral options available to each owner once the owners have decided what they each want.
The company also does not publish performance figures for any strategy it places.
About Start An Exchange
Start An Exchange is a tax deferral consultancy in Reno, Nevada, working with clients across the United States. It places 14 tax deferral strategies for real estate, including delayed, reverse, improvement and blended 1031 exchanges, Delaware Statutory Trusts, deferred sales trusts, opportunity zone funds and cost segregation studies. More information is at startanexchange.com.
Media Contact
Start An Exchange, Chris Shockowitz, Chief Operating Officer, (877) 829-7872, [email protected], https://www.startanexchange.com/contact
Media Contact
Company Name: Tax Deferral Strategies, LLC
Contact Person: Chris Shockowitz
Email: Send Email
Phone: 877-829-7872
City: Reno
Country: United States
Website: https://www.startanexchange.com
