tax question
Click here for Top Ten Discussions. CLICK HERE for Q & A Homepage
Receive Free Rental Owner Updates Email:  
MrLandlord Q & A
tax question (by tim [CA]) Sep 14, 2023 12:16 AM
       tax question (by Marv [IL]) Sep 14, 2023 8:25 AM
       tax question (by S i d [MO]) Sep 14, 2023 8:48 AM
       tax question (by S i d [MO]) Sep 14, 2023 8:52 AM
       tax question (by Ray-N-Pa [PA]) Sep 18, 2023 11:35 AM

Click here to reply to this discussion.
Click Here to send this discussion to a friend

tax question (by tim [CA]) Posted on: Sep 14, 2023 12:16 AM

I did a 1031 years ago from a single family home to a duplex. I assume I can do a a 1031 from a duplex back to a single family, right?

If so, how long am I required to rent it out for a specific period of time before I can move into it? Thinking I could live in it for 2 out of years and then sell.


tax question (by Marv [IL]) Posted on: Sep 14, 2023 8:25 AM

Yes you can do another 1031.

There is no stated time in the code. It must be reasonable.

tax question (by S i d [MO]) Posted on: Sep 14, 2023 8:48 AM

1031 allows exchanges for "like kind", meaning pretty much any piece of investment real estate can be exchanged for any other. However, there are some rules depending on the balance of any existing loan compared to future loans on the new property.

Basically, you have to avoid getting "Boot" (i.e. money) from the sale.

I swapped a four plex and two small SFHs into a 17-unit commercial property. So yeah, pretty flexible. I used a company that specialized in 1031 exchanges that was recommended by my Title Company. They made it effortless on my part. Just had to sign a few extra docs, and they acted as the intermediary to hold the funds until disbursal. Excellent experience, and only cost about $800, which is cheap on a deal of that size. Saved/deferred tens of thousands in taxes.

tax question (by S i d [MO]) Posted on: Sep 14, 2023 8:52 AM

One more thing about "boot"... be sure that none of the funds are used to pay down or pay off a mortgage balance. That is still considered "boot" because you are taking money out of the sale to reduce or eliminate your debt. Even though you aren't putting it in your pocket, effectively you are receiving a financial benefit from it, which isn't allowed because the whole idea of the exchange is you're simply carrying all the value forward into the next asset.

tax question (by Ray-N-Pa [PA]) Posted on: Sep 18, 2023 11:35 AM

Sid is spot on about how boot definitions can look a bit twisted.

I once sold two places that were free and clear and wanted to buy at least two places on the upleg. So I sold $400,000 in real estate. The first place I bought was over $400,000 so I assumed I was good in completing the 1031. I placed $250,000 down on a $550,000 place. That left $150,00 for the second deal. Well the second and third deal I identified didn't occur. I got a tax bill on the $150,000. More over, I had to file a tax extension since that $150,000 in funds wasn't returned until the 180 days was up. I don't understand how that was boot to this day......but I do understand today that you use up 100% of that cash as quickly as possible in this market place.

The money you spend on a good 1031 broker is money well spent.

Click Here to send this discussion to a friend
Report discussion to Webmaster

Subject: RE: tax question
Your Name:
Your State:

tax question
Would you like to be notified via email when somebody replies to this thread?
If so, you must include your valid email address here. Do not add your address more than once per thread/subject. By entering your email address here, you agree to receive notification from every time anyone replies to "this" thread. You will receive response notifications for up to one week following the original post. Your email address will not be visible to readers.
Email Address: