Taxes after 1031 exchange performed
Hi guys,
Will you pls help me figure out how to calculate taxes?
Lets say I purchased a (house 1) for 200K and sold it for 700K so the profit is 500K. However, since I did a 1031 exchange and purchased a 300K property (house 2) and a 200K property (house 3) to make sure I dont pay taxes..
Now, few years later, lets say I want to sell that 300K house that was purchased as a 1031 exchange, house 2.... Lets say I sell it for 400K... and make 100K profit.
What taxes will I be responsible for?
The taxes from the sale of the original house (house 1)
or the taxes from the sale of the post 1031 exchange house (house2)?
Thank you!
Will you pls help me figure out how to calculate taxes?
Lets say I purchased a (house 1) for 200K and sold it for 700K so the profit is 500K. However, since I did a 1031 exchange and purchased a 300K property (house 2) and a 200K property (house 3) to make sure I dont pay taxes..
Now, few years later, lets say I want to sell that 300K house that was purchased as a 1031 exchange, house 2.... Lets say I sell it for 400K... and make 100K profit.
What taxes will I be responsible for?
The taxes from the sale of the original house (house 1)
or the taxes from the sale of the post 1031 exchange house (house2)?
Thank you!
Most Popular Reply
@Mary Jay if you replaced a $700,000 property with two properties totaling only $500,000, you owed taxes on a $200,000 gain, assuming you had at least $200,000 of capital gains on the sold property. Replacement properties cover your cost basis first, capital gains second and the total of replacement  property needs to at least equal the price of what you sold or the excess is taxable boot