1031 Exchange
New to real estate. Will be selling a rehab property tomorrow(7/1) and will make a desent profit. Have already contracted to buy a second property which cost more than frist - will rehab and sale this property as well. Question - is it to late to do a 1031 exchange? Would I benefit (tax wise) from a 1031 exchange? Is there a another way to protect my profits from taxes? <IMG SRC="images/forum/smilies/icon_eek.gif"> [ Edited by morehouse on Date 06/30/2003 ]
As a general rule, (1) your rehab, quick-flip, property is not eligible to participate in a 1031 exchange, and,
(2) your profits are fully taxable at the same rate as your ordinary income in the year of sale.
Please consult your personal tax advisor for specific details.
Thanks for the response.
In order to qualify for 1031 exchange treatment, taxpayers must have the INTENT to hold both the relinquished and replacement property for investment, income production (rental) and/or use in a trade or business. Dealers/flippers, etc., typically do not qualify for 1031 exchange treatment.
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