1031 Exchange
Hi All,
This is the first time I have heard that you can have only one property for 1031 exchange. Is this true? This seems odd to me.
Another question I have is the capital gain tax for a senior citizen. A senior citizen hold an investment property and held it for one year. She wants to move into the property and live there for one year to avoid paying taxes. Her accountant told her she would save alot of tax money for doing that.
I am not sure if this is a good advice for an old lady.
Thanks.
Sam
You can have more than one property in a 1031.
I have heard you can convert the investment property for personal use, then she has a $250,000 cap agains exclusion if she decides to sell after living in that property for the minimum period.
(1) You can exchange out of multiple properties and you can exchange into multiple properties. The more properties involved the more complex it is, so make sure that you have a knowledgable qualified intermediary (accommodator).
(2) Her accountant is referring to Section 121 of the IRC (or a 121 exclusion for short). She can convert her investment property to her primary residence and then live there for 24 months and then she will qualify for the 121 exclusion where she can exclude up to $250,000 in capital gain taxes if she is single and $500,000 if she is married. She must live there and treat the home as her primary residence for 24 months though and the previous investment property time does not count toward the 24 month time requirement. Also, the 121 exclusion will exclude her capital gain but NOT any depreciation recaputure requirements.
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