does interspousal transfer deed step up cost base?
Hi,
I purchased my rental property few years ago for 300k in Washington State free and clear and since then it has doubled it's value with capital gain around 300k. I'm planning to get married in 2 years and want to buy a house in Los Angeles. Besides using 1031 exchange, is there anyway to avoid capital gain tax and also depreciation recapture? If I transfer the deed to my spouse when I get married, will the cost base be reassess to current market so I can avoid the 300k gain tax?
I currently have w2 income and is it better to sell when I have no income for lower tax rate?
Please advice.
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#3 Market Trends & Data Contributor
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Originally posted by @Ken Lou:Hi,
I purchased my rental property few years ago for 300k in Washington State free and clear and since then it has doubled it's value with capital gain around 300k. I'm planning to get married in 2 years and want to buy a house in Los Angeles. Besides using 1031 exchange, is there anyway to avoid capital gain tax and also depreciation recapture? If I transfer the deed to my spouse when I get married, will the cost base be reassess to current market so I can avoid the 300k gain tax?
I currently have w2 income and is it better to sell when I have no income for lower tax rate?
Please advice.
Nope. Sorry, that's what happens when you vote democrat. Tax, tax, tax.
Are you trying to 1031 exchange the proceeds to buy another rental property? I don’t think you can 1031 exchange into a primary residence, but I will leave that to the professionals on here to answer.
Why don’t you just pull the equity out to buy another rental? Generally, when you sell it is a taxable event.
You might 1031 into an LA rental now and then turn that rental into your primary after the 2 years.
Gift basis is usually the LOWER FMV or your basis.