Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120809  
Subject: Re: Tax on 1031 exchange Date: 8/9/2009 4:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
We own 1 rental single family home in California and 1 in Maryland. We currently live in California.

OK. So California will want tax on all of your worldwide income. You will probably get some credit for taxes paid to other states (like Maryland).

If we do 1031 exchanges for rental properties in say, Texas where there is no state income tax, will we have to pay state income taxes in California and Maryland on the exchange properties?

I don't know about MD, but CA will allow you to defer tax on any gain, just like the feds. But when you sell the replacement house in TX, CA will want their share of the deferred tax. And if you continue to be a CA resident, they will tax the whole gain, not just the portion deferred from the CA real estate.

We know that any Federal tax will be deferred, but, don't know about the state taxes.

Keep in mind that as a CA resident, CA will tax you on all of these properties, no matter where they are located.

Perhaps you are considering a move to TX sometime after the exchange. In that setting, you would still need to pay CA tax on the gain deferred from the CA house when you sell the replacement house in TX.

--Peter
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement