1031 Exchange Question
Does the income you get from rent need to be applied to your new property in a 1031 exchange? Or only profits from the sale of your old property
Not sure what you are asking... To defer the tax liability of an investment property via a 1031 exchange, you need to transfer your interest another property(ies) of equal or greater value.
@Dave Foster maybe there is a nuance you know about. And, was there another criteria on the value to be exchanged? Thanks.
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@David M.Thanks for that shout out. @Christian Peevy, If I understand what you're asking, the 1031 exchange defers all gain (profit and depreciation recapture) from the sale of the asset. Income is not included in that equation. Income is netted with expenses and shows as regular income on your tax return.
The one opportunity here is if the client is a realtor as well. They do have the option of taking a commission on the sale and paying ordinary income tax on it. Or not charging a commission so the "commission" rolls into the 1031 exchange.
- Dave Foster
Yes that answered my question. Thank you!