After doing a 1031 is each party required to hold the properties received for a certian [minimum] time period before selling it outside of a 1031 ? I understand that I would then have to pay the capial gain tax which would be the difference between the price it was last figured on and what I would sell it for now. Clear as mud ? Thanks --------Ug
After doing a 1031 is each party required to hold the properties received for a certian [minimum] time period before selling it outside of a 1031 ? No - there is no holding period requirement.I understand that I would then have to pay the capial gain tax which would be the difference between the price it was last figured on and what I would sell it for now. Right - I think. A 1031 exchange is just tax deferred, not tax free. The gain on your old property is just deferred until you sell the replacement property.Clear as mud ?Yep. I'm wondering about the things you're not saying. Like why would you go to the trouble of doing a 1031 exchange if you're just going to turn around and sell the replacement property outright. And just to make it clear, you don't need to be concerned about what the other party does with the property you gave up.--Peter
Hello uglier:Technically there is no required minimum holding period on the property acquired in a §1031 exchange; however, implicit at the beginning of the exchange is that your "intent" in executing the exchange is/was to put the acquired property into productive business/investment use. Therefore, if you perform a §1031 exhange & then sell the property a month or two later the obvious question to ask is what was your intent on the original date of the exchange. Some have suggested a minimum holding period of 1 or 2 years thinking that the passage of time supports intent. This might be true when an exchange is performed & later the acquired property is removed from business/investment usage and converted to a personal asset. Beyond that, I see it as time independent & exclusively a facts & circumstances test particularly when you can document your intent at the §1031 date and can later demonstrate a change in facts/circumstances and therefore your intent changes and you therefore dispose of the property acquired.Somewhat muddier or clearer?TheBadger
re; tax free exchange - As to why we are doing an exchange. There is property we got title through an estate. There is property passed to the for heirs outside the estate. Through the estate, all taxes were paid by the estate. Property outside the estate has not been appraised for taxes since 1966. My wife's three sister want to use their share of property they own outside the estate and deed it to my wife.In exchange they want to use today's appraised value on that property towards buying additional property that my wife inheirted from the estate. They would get more value from this arrangement since they are not paying any taxes.I understand that we would have to pay the taxes on the property that we get,when we sell.This was agreed to get away from these people as they would not settle the estate without. Believe me it's worth it.Thamks----------UG
Re; tax-free exchange----- Thanks for the reply. Not real clear on "intent", as we are doing this not for the property we are getting; we knew all along we were going to sell. It was done for the advantage the other parties were getting on the property they will take deed to.I tried to explain in further detail in another post in this thread if you care to read.About done with closing an estate and for those who have not given their own estate any thought, please do so now. It's been three years and ugly. With a little fore thought this could have been a cinch. Thanks-----------UG
Had a similar situation as yours. Here's the bottom line. A 1031 exchange only defers taxes, doesn't reduce them nor change the cost basis of the property aquired. When you sell, you'll own capital gains based upon the original value and the rate based upon when the original purchase was made.The only thing that might change the above, you recieved it from an estate so I'm guessing someone died and gave it to you. So in that case, the "purchase price" and "holding period" might be reset to day of death of the giver.Definitely talk to a CPA or tax attourney which I'm sure you've had because of the 1031.JLC
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar<