Here is a question about my exchange. I sold 6 units in San Diego and bought a rental condo and 2 house on one property for rentals. The condo is rented out no problem. The two houses where bad fixer but only 6 house from the beach at a bargain price. Once I purchase the house in May I gave both tenants notice since the houses where unsafe and unlivable. Since then the wife and I have been working on the house full time. The houses will not be ready for rent until Feb and April of 2018. Since I did a like kind of exchange (Rental property for rental property) and will only had rented it for a couple of months in 2017 will this be a problem. I plan on keeping all the properties for 15 to 20 years and the 6 plex sold I had for 16 years.
You can exchange from any real estate category to another real estate category is like kind. For example, you can sell a condo and exchange into farm land. It does not need to be rental property for rental property. ALWAYS consult your attorney and QI.
"Quality or grade does not matter. Most real estate will be like-kind to other real estate."
@Tommy Sowell , You're fine. You purchased those properties with the intent to hold for productive use. And you will be putting them into productive use. The rehab has just taken longer than anticipated. No problem. Happy reno!
Great, I just wanted to make sure since the rehab was bigger then I thought. Once finished they will make great rentals an get more rent. Thank you
Confirm that with your CPA. 45 day and 180 COE after you get into contract on your SD property. No extension allowed. Keep in mind Congress is trying to void 1031 exchange so it is not a 100% sure thing on 2918 tax yet. If you are trading up there is no recaputure of past depreciation claimed.
E.G. SD: $900K HI: total is $800K you have 100K cap gain + recap of depreciation.
$900K does not include: commission, closing cost and any last min improvement. It can be $859K as cost basis. If you paid more than 859K then there is no tax liability
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