1031 exchange?
Q. I've heard this many times, but don't understand it. Here's my scenario...I own a rental property worth $600,000, and am looking to sell it and purchase a different rental property for $2,400,000. Is 1031 exchange something I should be talking to my accountant about, or is it not related to my scenario?
Asked by RE Investor - Tue Jan 30 11:56:38 2007 - - 3 Answers - 0 Comments

A. Any time you're selling investment property and using the proceeds to purchase investment property, you should defer the taxes, so you'll HAVE all your proceeds to invest. Yes, talk to your CPA.
Answered by Seth A - Tue Jan 30 15:10:17 2007

1031 Exchange ?
Q. If I own a home and want to rent it, how many years do i have to rent it to have a 1031 exchange for income property?
Asked by Kevin K. - Wed May 2 14:35:48 2007 - - 2 Answers - 0 Comments

A. You say that you own a home and want to rent it? My question to you is how long have you owned and lived in it as your personal residence? I ask you this because if you lived in it for 2 years (dont have to be consecutive years) with in the last 5 years, you may be able to take advantage of Sec 121 Exclusion. This will give you $250K-$500K of money in your pocket with paying a dime on taxes. If Sec 121 does not apply to you, then in order to be eligible for Sec 1031 exchange, I suggest you rent it for 1yr after you lived in it to show intent to the IRS that you are holding it as an investment since your will be exchanging it with another investment. Here is the website of the 1031 Exchange company we normally use. www.ipx1031.com … [cont.]
Answered by SCCRealEstateUNCENSORED.com - Wed May 2 15:38:48 2007

Can funds in a 1031 exchange be used for repairs on the acquired property?
Q. If a piece of property acquired in a 1031 exchange requires repairs at the time of purchase, can 1031 funds be used for these repairs if the work is done within the 180 day window? I know that repairs could be done by the seller and added to the cost basis of the property, but I am purchasing "as is" homes where the seller is unwilling to do this. In the case of major repairs such as plumbing or HVAC, it would be nice if I could meet these costs from the 1031 pool instead of liquidating 1031 funds, and then having to amortize the cost of the repairs.
Asked by nkasoff - Sat Oct 6 10:19:21 2007 - - 1 Answers - 0 Comments

A. 1031 funds can be used for improvements to the property. Some links with information. A 1031 tax expert could save you a lot of problems later to make sure this is done properly.
Answered by Linda B - Sat Oct 6 14:24:12 2007

How often can I do a 1031 exchange?
Q. Say someone does a 1031 exchange on home A and replaces with home B. Can they perform another 1031 exchange if they don't like home B and go for home C? Is there a time requirement they need to hold on to home B? I've been trying to find some guidance about this, but there isn't much. Any help would be great. Thanks.
Asked by Tweety018 - Fri Feb 5 22:14:34 2010 - - 1 Answers - 0 Comments

A. Section 1031 does not give specific as to how long an investor must hold property, but it does day that property must be "held for productive use in a trade or business or for investment". You can sell property B and purchase property C, but you need to consult with your tax professional to make sure that you can prove, if ever necessary, that you held the property for investment purposes. If the facts and circumstances are on your side, I would suspect that your tax professional would say that you could do another exchange. If you would like to read further on this topic, view the following links from my company's website. An article on how long you must hold property - If you would like to learn more about the process, visit our… [cont.]
Answered by pro1031 - Sat Feb 6 17:28:58 2010

Can I use a 1031 Exchange to buy new property when selling commercial property?
Q. I own a building and I converted it from apartments to condos. I have sold four (of six) and I want to take the proceeds from the last sale or two and put it into a 1031 Exchange. I have not sold them yet. May I do this and buy a piece of land? Then I would use the land to build more condos. In the past I setup a 1031 Exchange for the sale of residential property to purchase this apartment building. In a like-kind exchange, the property being acquired must be similar in nature and character to the property being relinquished and must be located in the United States. The IRS is quite liberal in its interpretation of like-kind properties and views almost all real estate as similar in nature or character. Thus, virtually all real property… [cont.]
Asked by Stukish - Thu Aug 9 16:06:27 2007 - - 2 Answers - 0 Comments

A. My understanding is that the 1031 Exchange must be a "like kind" exchange. I think it has to be of similar type and equal or higher value. I don't think raw land would qualify. But, I'm not a 1031 Exchange expert...
Answered by bigoilman - Thu Aug 9 21:55:25 2007

Is a 1031 exchange possible with a currently owned property?
Q. Typical exchange 1031 involves the subsequent purchase of a property after a sale. My situation is a little different. I want to apply the gain on the sale of one investment property, against a mortgage balance on a second investment property which I currently own. Would that transaction be allowed as a 1031 exchange?
Asked by Carl G - Sun Aug 2 15:37:27 2009 - - 4 Answers - 0 Comments

Is anyone familiar with a 1031 exchange?
Q. I am interested in doing one, but I am looking for some testimonials about the 1031 exchange experience. Thank you in advance for your help.
Asked by mrshife - Thu Nov 15 18:03:01 2007 - - 2 Answers - 0 Comments

A. As a 1031 Accommodator with First American Exchange Company, one of the country's largest 1031 Accommodators, let me help answer your question. The 1031 Exchange is a rather simple process. It allows an investor to sell an investment property and purchase replacement investment property and you can defer the capital gain liability. Please understand that the 1031 Exchange is for Investment Properties only. The 1031 does not apply to Primary Residences. Per the 1031 Code, you must buy and sell "property held for productive use in a trade or business or for investment" (IRC section 1031(a)(1)). This means that you can buy and sell any type of property held for these purposes. Sell a commercial building and purchase raw land. Sell a rental… [cont.]
Answered by pro1031 - Fri Nov 16 00:23:02 2007

can you make some one sell their share of a property if you have yours in a 1031 exchange ?
Q. If you inheirit a real property from a probate avoidance trust can you make the other parties sale their parts if you have done a 1031 exchange with your share?
Asked by 2sweet2b4got@att.net - Tue Dec 11 10:53:40 2007 - - 1 Answers - 1 Comments

A. No. Just because YOU want to do something does NOT require that ALL others give up their rights in the property to make you happy. YOU are the one that committed to a 1031, that;s YOUR problem and not their's. Why didn't you ask this BEFORE doing the 1031? Why didn't you READ the terms of the trust because THAT is the LEGAL document that spells out HOW the property can and wil be divided. Why do so many people have a LEGAL document that controlls the situation but fail to read it and come on here asking people who having NOTHING to do with the situation solve it for them?
Answered by Jerrold J - Tue Dec 11 12:32:58 2007

Can an LLC or S-corp realestate investment co do 1031 Exchange?
Q. I have been buying realestates and have held the property under an S-corp or LLC. I am planning to sell and then do a 1031 exchange. Can LLC/S-corp do this? I have done it in the past as an individual person, but not sure if the IRS allows a corporation/LLC investment firm to keep on deferring the gains.
Asked by ibkid i - Thu Jul 5 01:05:58 2007 - - 2 Answers - 0 Comments

A. Yes, as long as ownership stays the same. ABC corp sells, ABC corp needs to purchase. Dissolving entities or changing ownership before selling or after purchasing should be looked at by a tax adviser. A single member llc is considered a "disregarded entity" by the IRS and is the exception. John Smith single member llc can sell and John Smith the individual can purchase. www.1031alternatives.net
Answered by Costa Financial - Fri Jul 6 13:25:03 2007

I want to trade my rentals for better income property 1031 exchange?
Q. San Diego County is buying my rentals to convert into a Library. I want to do a 1031 capital gains Deferment / exchange for a nice 3 to 6 unite apt. build. One bedrooms only. Will have cash for down payment from 1031. I am looking for a price range between 400k & 500k , around 100k per unite. I want an annual return of 5% after all expencess
Asked by Jim W - Mon Jan 21 19:48:10 2008 - - 2 Answers - 0 Comments

After a 1031 exchange, how is any cash {boot) taxed if rental property held for many years? Long term gain ?
Q. The exchange did not leave enough money (after several properties were exchanged) to make additional purchase so balance of $ received in cash.
Asked by Lynne P - Wed Oct 10 11:11:16 2007 - - 2 Answers - 0 Comments

A. You are correct. You recognize long-term capital gain to the extent of boot received.
Answered by JaretR72 - Wed Oct 10 20:48:15 2007

1031 exchange how does it work?
Q. I just bought a home in June for a great deal. I am thinking about selling and getting another home, however only living there for 5 months I would like to avoide cap gains tax. Can I do a 1031 exchange on new home? If I live there for two years does that exclude me from tax?
Asked by Matt H - Sat Nov 22 02:33:39 2008 - - 2 Answers - 0 Comments

A. 1031 exchange does not apply to residential property. From the IRS web site: Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.
Answered by Tom Z - Sat Nov 22 16:50:18 2008

1031 Exchange - Can I take out a mortgage in my name on someone else's property?
Q. A relative is doing a 1031 exchange on an investment property into another investment property. It is a house I will be living in and will eventually get the entire property. My question is this: Can I take out a mortgage in my name, on a 1031 exchange property that is not in my name? If so, does it have to be an non-owner occupied loan?
Asked by livepassive - Fri Jul 14 10:42:30 2006 - - 5 Answers - 0 Comments

A. Sounds like the house that is being purchased as a part of the exchange would have to be in your relative s name.
Answered by jimmy dean - Fri Jul 14 11:07:24 2006

1031 Exchange? Can I exchange a business opportunity(franchise) after selling the residential income property
Q. Is it considered like-kind exchange and qualify for 1031 exchange
Asked by ijc - Wed Jun 18 17:11:18 2008 - - 2 Answers - 0 Comments

A. if selling a rental property, you need to exchange for a rental property. That is where the "like-kind" comes in. A franchise is not the same as a rental
Answered by Tim - Wed Jun 18 17:58:16 2008

How is a 1031 exchange of residential property accted & reported to the IRS? sale, deprec., and improvements?
Q. The original property was sold at a gain, but I was advised that all proceeds had to be rolled iinto the exchange-what happens to gain, basis, improvements etc.?
Asked by jrt - Tue Jan 9 15:31:32 2007 - - 3 Answers - 0 Comments

A. In a like kind exchange, no gain is currently recognized and your basis in the original property will roll over to the new property you received in exchange. However, if you received something else in addition to the new property (i.e. you gave up the house, but in return you received the new house AND cash), you will need to recognize gain to the extent of the "boot" (the asset received).
Answered by jseah114 - Tue Jan 9 16:38:01 2007

Can I use the 1031 Exchange if im selling one property for a higher value property? Im buying in incriments?
Q. Like if I sell a property worth 20,000 and buy two properties with that money one for 5,000 worth 10,000 and one for 15,000 worth 30,000 can I do the 1031 exchange if im getting my assets from tax sale auctions and buying in incriments like that?
Asked by unique - Tue Aug 7 15:43:19 2007 - - 1 Answers - 0 Comments

A. quick answer yes
Answered by zocko - Tue Aug 7 15:50:45 2007

can i use a 1031 exchange for flipping houses?
Q. how long do i have to hold onto the property to use a 1031? what requirements are there to use a 1031?
Asked by macmo187 - Sun Dec 9 13:25:43 2007 - - 3 Answers - 0 Comments

A. My understanding is no. "Qualifying Property - Certain types of property are specifically excluded from Section 1031 treatment: property held primarily for sale; inventories; stocks, bonds or notes; other securities or evidences of indebtedness; interests in a partnership; certificates of trusts or beneficial interest; and choses in action. In general, if property is not specifically excluded, it can qualify for tax-deferred treatment. Proper Purpose - Both the relinquished property and replacement property must be held for productive use in a trade or business or for investment. Property acquired for immediate resale will not qualify. The taxpayer's personal residence will not qualify. " Another requirement for a 1031 is a proper… [cont.]
Answered by heyteach - Sun Dec 9 13:41:12 2007

Can I 1031 exchange comm. land for residential homes? Is there another way to offset capital gains?
Q. Can I 1031 exchange comm. land for residential homes? Is there another way to offset capital gains?
Asked by Ella E - Thu Feb 28 15:59:57 2008 - - 5 Answers - 0 Comments

A. You can do a 1031 exchange and exchange from a commercial property into a residential home, as long as the commercial property AND the residential home are held for investment, income, or business intent. And, the gain is not offset, rather it is deferred to a later date. So, you defer the capital gains on the commercial property, but they transfer over to the residential home and if you sell the home that gain would be taxable (unless you did another 1031). For your situation, where you are selling an investment property and purchasing another, it is likely that a 1031 exchange is your best bet. Check out for more info.
Answered by Chloe Marty - Thu Feb 28 17:18:39 2008

I have a question about a 1031 Exchange and if my situation will work for a 1031.?
Q. I moved from Los Angeles to Phoenix in July sort of sight unseen, I am now paying the price with a 40 minute commute in each direction. I have to be in my house for at least a year due to home builder s regulations but want to move soon after. At this point I really do not care about equity gains and just want to make my money back that I put down as a down payment. If this is my primary residence can I sell it and buy a new home under 1031 exchange? If I use the new house as my primary residence can I defer the capital gains taxes and when will I have to pay them.
Asked by ramos00 - Wed Nov 8 12:36:26 2006 - - 4 Answers - 0 Comments

A. You only pay capital gains on PROFIT, not gross proceeds. If you come out at 0, you dont have to worry about capital gains. I bought house for $152, sold it at $167, and only paid capital gains on about $5K becuase that was all the profit I made on the deal. As long as you keep your paperwork to show that the cash you're getting back is your down payment and not profit (hang onto your original closing statement) then the 1031 exchange is a moot point.
Answered by Amanda H - Wed Nov 8 12:46:17 2006

If I buy a property on a 1031 exchange, can I sell it in one year?
Q. In addition, during this year, I will have my son paying me monthly payments (principal & interest). At the end of this year, I will sell the property to my son at the new market value. Will my son be able to write-off the interest that he pays for the first 12 months on his taxes?
Asked by house hunter - Fri Apr 6 21:39:15 2007 - - 1 Answers - 0 Comments

A. Why don't you get an accountant?
Answered by sunshine_today - Fri Apr 6 22:27:47 2007