RE Attorneys or CPAs that can help me understand my 1031 options

5 Replies

Hello all - this is my first BP post.

I have a single family that is zoned for multi. I'm just completing work on adding a suite in the basement and a few other upgrades to force appreciation. I've only owned the home for a year, but am considering selling and acquiring a new property through a 1031 exchange.

Are there any attorneys or CPAs, or anyone that can recommend one, in the Denver area that I can contact to help me understand my options?

I know I can just Google this, but would appreciate references from the BP community.

Thanks 

- tn

Originally posted by @Tony N. :

Hello all - this is my first BP post.

I have a single family that is zoned for multi. I'm just completing work on adding a suite in the basement and a few other upgrades to force appreciation. I've only owned the home for a year, but am considering selling and acquiring a new property through a 1031 exchange.

Are there any attorneys or CPAs, or anyone that can recommend one, in the Denver area that I can contact to help me understand my options?

I know I can just Google this, but would appreciate references from the BP community.

Thanks 

Tony, if you have lived in the property as your primary residence. You may not need to do a 1031 exchange.

Hey Bill - thanks for the reply. I have lived in the home, but only for a year. I think I'll likely hold it, but still talk with some folks about exchange rules to better understand it.

Thanks!

@Tony N. , Since the property it currently your primary residence it is not being used for investment so not eligible for 1031 treatment.  You've got a couple of courses available to you.

1. If you live in it for one more year so that you have lived in it for 2 out of the 5 years prior to selling it, you will be eligible for the primary residence exclusion in sec 121.  You would be able to take the first $250K ($500K if married) of profit tax free.  You can use this exemption once every two years.  This money is tax free.  You can use the proceeds in any way you want.

2. If you move out of the property and change the use for investment and then use the property for investment purposes long enough to demonstrate your investment intent (there is no statutory holding period specifically but most folks feel comfortable at anything more than a year) you would then be eligible to do a 1031 exchange and defer the tax on the gain indefinitely.  This is tax deferred and you must use the proceeds in a specific process of the 1031 to purchase replacement investment property.

Given that each of these processes would take about the same time I'd lean toward staying there until you qualify for the primary residence exclusion.  Tax free is almost always better than tax deferred.

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