L/O To Save On Capitol Gains Tax
In another post someone mentioned that a L/O may save on tax or be another option instead of doing a 1031 exchange. Could anyone please explain this a little
Thanks
In another post someone mentioned that a L/O may save on tax or be another option instead of doing a 1031 exchange. Could anyone please explain this a little
Thanks
Unless we read the other post, we have no context within which we can frame an answer.
Give us a pointer to the other post? Was it on this website?
It did not say much. So I guess what my question is if there is any way a L/O could help you save on www.cap.gains tax?
I cant seem to think of anyway it would be a benefit to L/O for tax reason.
There is a tax benefit, but it is not a capital gains benefit. Option consideration is not taxable until the option is exercised or abandoned.
NewKidInTown is correct. It all boils down to INTENT to HOLD for rental, investment or use in your business. It does not really matter how long you own the property, but what your intent was. The reason many experts, including myself, recommnend a 12 month or longer holding period is that the best way to demonstrate your intent to hold for investment is to do just that - hold it for investment. Also, Congress was considering a 12 month holding requirement over 10 years ago. It never made it out of committee and therefore was never voted on, but it gives us a good idea of what they were thinking. The investors 1031 exchange would be disallowed if the original intent was to hold for sale and not for rental or investment. Proving intent can be very difficult at times. Also, dealers are NOT automatically disqualified from completing 1031 exchange transactions, but it does pose many problems in arguing their transaction was held for investment and not for sale.
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