1031 & Inheritance Tax

[Natalka Doblosky]

Can I avoid paying inheritance tax in NJ with a 1031 on a residential property sale?

[William Thompson]

Quote from @Natalka Doblosky:

Can I avoid paying inheritance tax in NJ with a 1031 on a residential property sale?

Important distinction here: a 1031 exchange can defer capital gains tax on the sale of an investment property, but it doesn’t eliminate or avoid inheritance/estate tax in New Jersey. Those are two different sets of rules. If you’re dealing with an inherited property, step-up in basis and NJ inheritance tax rules will be bigger factors than a 1031. The right planning can help, but a straight 1031 won’t remove the inheritance tax obligation.