There is a property in South Carolina that is looking for investor equity. The plan is to purchase a multifamily apartment property and implement the South Carolina affordable tax abatement, where you partner with a non-profit organization and have income-restricted rents at the 80% AMI level. One potential investor is interested but is looking to invest with 1031 money, is this okay, or does the tax abatement affect the ability to accommodate a 1031 investor?

Investing 1031 exchange funds into a property that will utilize the South Carolina affordable tax abatement program can be a bit complex, but it is possible. Here’s how it works: 1. **1031 Exchange Basics**: A 1031 exchange allows an investor to defer capital gains taxes by reinvesting the proceeds from the sale of a property into a "like-kind" property. The key requirement is that the new investment must be similar in nature and value. 2. **South Carolina Affordable Tax Abatement**: This program provides property tax reductions for properties that partner with a non-profit and offer income-restricted rents. The goal is to encourage affordable housing. 3. **Compatibility**: The tax abatement itself does not inherently disqualify a property from being part of a 1031 exchange. However, the investor must ensure that the property still qualifies as "like-kind" and that the investment structure aligns with 1031 requirements. 4. **Considerations**: - **Ownership Structure**: The investor must have a direct ownership interest in the property. If the property is owned through a partnership or LLC, the structure must allow for the investor to have a direct interest. - **Income Restrictions**: The income restrictions and partnership with a non-profit should not affect the property’s eligibility for a 1031 exchange, but they may impact the property's income potential, which the investor should consider. 5. **Professional Advice**: It’s crucial for the investor

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