Let's try this scenario...if you please... (sale, real estate)

[10scoachrick]

I've worked some home-selling magic in the past; but this scenario might actually play out in my personal life:
What if I found a homeowner whose property had the attributes(mainly a yard and single story or at least master on main) we desire AND they were interested in swapping for our current townhouse-style condo in a very desirable location/school track.

Assuming we both own our properties outright and agree that their values match up, how tricky would it be to "simply" trade properties??? I'm sure the real estate folks would love to get involved; but I don't know why they would be of help. Let's assume we get the titles checked out and have a RE lawyer take care of the paperwork. Will the state or county make this unnecessarily complicated...or might I have a chance to work my spell once again?

[Ivory Lee Spurlock]

It SHOULD BE a very easy process for 2 parties to swap properties if that's what they want to do. It SHOULDN'T BE any more complicated than just signing some papers at the court house. And it SHOULDN'T cost any more than some filing fees. It SHOULD BE so simple, a lawyer is not even needed. It SHOULD BE, but I bet it WON'T BE. I bet it will be a big headache. Court fees, attorney fees, filing fees, and any other fees that might applly. I bet there will be a permit involved too. I thought it would be an easy process when I swapped out my old mobile home for a new mobile home on my property. But that was not the case. It cost me alot of money and time and inconvenience and worry. If I had known all that was involved, I would have done things differently.

[ScoPro]

I’m sure a title company would need to be involved = $$$.

[astrohip]

I *think*, and I am not a tax lawyer, that's considered barter by the IRS, and it must be declared.

So it's not the county or state that would get you, but the Feds!

Again, IANAL.

[10scoachrick]

Pretty sure my tag line is:

"It's never as easy as it SHOULD be!!!"

[10scoachrick]

Originally Posted by ScoPro

I’m sure a title company would need to be involved = $$$.

Probably not a bad idea to make sure both titles are clear; so I would expect some $$$ to be involved.

[blakely]

Absolutely use a title company.

Depending on the complexity of the trade, you may also want a RE lawyer to draft the sale/trade document. The title company might be able to do that, but I'd want to be sure that the transaction is executed legally and that you both own what you think you own at the end of it.

We used a title company for a real estate transaction we agreed upon privately with another individual (no real estate agent involved). It was a smooth process, but there wasn't a property swap involved. The title fees were reasonable and we wanted to ensure the property cleared title without any issues or liens. Title insurance protects you against your title being challenged. Worth every cent IMO, and we saved on real estate transaction fees.

[CarnivalGal]

You may want to post this in the Real Estate forum.

That said, I would consult with a real estate attorney. As others have mentioned, it's not a simple as it probably should be.

[astrohip]

I did some more research on this. Again, IANAL.

The IRS treats a residential property swap as a sale. They take fair market value of both properties, and assume you sold & paid the appraised values. They then look for any capital gains.

If you don't report it, it's tax fraud.

[blakely]

Originally Posted by astrohip

I did some more research on this. Again, IANAL.

The IRS treats a residential property swap as a sale. They take fair market value of both properties, and assume you sold & paid the appraised values. They then look for any capital gains.

If you don't report it, it's tax fraud.

I didn't assume OP was trying to avoid reporting to the IRS, rather just avoid paying real estate commissions. Certainly anything that must be declared for taxes will need to be declared, whether OP uses a realtor or not. And if these are non-income earning residential properties and valued equally, there shouldn't be an associated additional tax burden from the transaction.

This "swap" may really turn out to be a sale of two different properties, with the "coincidence" that Seller A is buying Seller B's home and vice-versa. I'd want to dig a little deeper to get a true assessment of each home's value...it would be a rare coincidence that they are precisely equal in value, but it's certainly possible.

Again, I'd advocate for hiring a title company and a RE lawyer to draft the sale documents.