Can a 1031 exchange be used to buy out another owner of a residential rental property?

Say two people own one rental house 50/50. There is no assumed business name, LLC or partnership. The deed has both their real names on it.

They have never filed as a partnership, they split the rent / expenses and each filed their own schedule E.

One of the owners would like use the proceeds from the sale of another rental property to buy out the other owner.

Is this permitted? Thanks in advance


  • will the numbers even work regarding the amount of equity and the amount of debt? Sep 7, 2021 at 12:26
  • I am not sure what you mean. The two owners have mutually agreed on the fair market value of the rental. Owner A has just sold another rental property and has the cash (with a qualified intermediary) to buy the other 50% owner B out at market value. The property is unencumbered by any debt.
    – turtle
    Sep 8, 2021 at 20:06
  • if you don't invest all the money from selling a whole house into buying a half a house, you will still owe taxes on the partial profits. Sep 8, 2021 at 20:13
  • For the purpose of this question the amounts are equal.
    – turtle
    Sep 10, 2021 at 16:57


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