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1031 tax exchange on investment property

Discussion in 'Road Side Pub' started by MG0h3, Apr 25, 2018.

  1. Twisted2v

    Twisted2v Active Member Established Member

    Messages:
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    Joined:
    Feb 16, 2011
    Location:
    USA
    #1 thing to keep in mind is that 1031 defers taxes owed to a later period in time. You're still on the hook.

    You will pay a tax on all of the depreciation deductions (whether or not you even took depreciation, so take it) you took called depreciation recapture.

    The other tax you can work around is the capital gain exclusion if you made the home a primary residence in 2 of the last 5 years.

    If you make a primary residence into a rental, then you have about 3 rental years max until you no longer qualify for cap gain exclusion.
     
  2. MG0h3

    MG0h3 Well-Known Member Established Member

    Messages:
    8,684
    Joined:
    Jul 23, 2014
    Location:
    El Paso, TX
    Roger guys. I'll double check on using the cash to buy a new primary, won't be surprised if you guys are right about not being able to do that.

    Could always buy a house I want to live in and rent it for a couple years I suppose.

    Kind of want to get a multi-family property so might look into that as well.
     

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