Got a question about 1031's. My parents own a rental property that has appreciated significantly - from around $175,000 to $500,000. They do not want to have to pay capital gains taxes on this profit and are interested in doing a 1031 to avoid this. They have identified a rental property that costs about $550,000 that they are interested in. Their question is, what happens if they end up selling house #2 down the road and do not make any money on it. Do they still need to pay the capital gains taxes from house #1? Also, what tax implications would it have if they made house #2 their primary residence someday? Thank you!
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