1031 Capital Gain Questions

3 Replies

Folks, hoping someone can clarify a few things about deferred gains for me. I'm in a 1031 as of a few days ago and I'm trying to figure out how much capital gains I would be liable for if I decided not to actually execute the 1031. I'd normally discuss this with my accountant but for reasons I don't quite understand, he seems to have gone A-wall. I'm still hoping he'll make contact but in the meantime if someone can help me with some things I'm confused about that would allow me to think more clearly. I'll use rough numbers to describe my situation. I'm just trying to get a ballpark idea of the numbers. Here goes....

Jan 2007, sold property (A), 360k went into 1031 (A)

Jan 2007, bought property (B) for 675k using the 1031 360k and a mortage for the remainder

Jan 2007, rented out property (B)

June 2019, renters moved out

While it was rented (2007 - 2019), it was depreciated yearly as standard

April 2020, sold property (B) for 1.4M. Sale costs = 200k, mortage payoff = 200k i.e. 1M went into 1031 (B) (where it is now)

I will have no personal income myself in 2020 tax year

MAJOR question is this:

When it comes to calculating the gain, regardless of the gain amount

a) Because of zero income in the tax year of the sale, do I qualify for 0% capital gain tax rate for the federal portion?

In other words, I know I have to pay 13.3% for the California portion of the gain, but can I escape the federal part?


Your Accountant is AWOL because it is less than a week to the tax filing deadline.  I am 1000% positive that they need to focus on that, rather than this question which is non-urgent and will take more than 15 minutes to answer.

Be patient.  Your accountant will pop their head back up as soon as they've had a little time to breathe.