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do i need a 1031 exchange
Sent to Tax Experts August 06 09:40 PM

I rented a house out that i had lived in for 18
years rented the house in aug 2003 and now i want to sale it do I need a 1031 exchange

Customer (name blocked for privacy)
Status:  Closed   Value: $5
Answer
August 6 9:50 PM (9 minutes and 19 seconds later)
         
REPLIEDCheck Mark

If you sell it before august 2006, you will qualify for exemption under Section 121. This exemption applies to the first $250,000 ($500,000 if married filing jointly) of gain - that amount is completely tax free. Any gain over that will be subject to tax as a long term capital gain - maximum tax rate of 15%. One note of caution - this does not apply to any gain attributable to "recapturing" any depreciation that you took during the time the property was a rental. That amount will be taxable.

You may choose to sell it as a rental property instead of a residence. If you do so, you would need to use a 1031 exchange in order to avoid paying capital gain tax currently.

jon@jonacpa.com



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Reply
August 6 10:31 PM (41 minutes and 9 seconds later)
         
Reply to Jon Andrews's Post: Thank You
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