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I am selling my rental condo and I am going to make a fifty thousand dollar profit. My question is, can I take twenty five thousand dollars of the profit to purchase a deeded indoor parking space, and pay taxes on the other twenty five thousand dollars? Could this qualify as a 1031 exchange?

Thanks in advance,

Mike
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You can certainly take $25K of the profit and buy a parking space, but I expect you're gonna pay taxes on all $50K. A 1031 exchange normally requires that you exchange property for like property, and moreover the property has to be in productive use in a business. So you could acquire another rental condo or a small apartment building in an exchange. Unless you're planning on erecting a tent in the parking space and renting it out as low cost housing, I don't think this will fly as a 1031 exchange.

Lorenzo
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I am selling my rental condo and I am going to make a fifty thousand dollar profit. My question is, can I take twenty five thousand dollars of the profit to purchase a deeded indoor parking space, and pay taxes on the other twenty five thousand dollars? Could this qualify as a 1031 exchange?

The numbers don't justify a 1031 exchange. In a 1031 you defer immediate capital gains taxes on the positive difference between your calulated profit minus your boot(non-like kind assets received or liabilities trnsfered) and calculated profit. Your boot from the sale consists of your cost basis plus your net profit minus the $25,000 real estate(Parking space) received. This appears to be larger than your calculated profit, so you will be unable to defer any gain on the 1031 exchange.
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No. of Recommendations: 0
You can certainly take $25K of the profit and buy a parking space, but I expect you're gonna pay taxes on all $50K. A 1031 exchange normally requires that you exchange property for like property, and moreover the property has to be in productive use in a business. So you could acquire another rental condo or a small apartment building in an exchange. Unless you're planning on erecting a tent in the parking space and renting it out as low cost housing, I don't think this will fly as a 1031 exchange.

Lorenzo

All domestic rental real estate is considered like kin(land. warehouse, residential real estate) so I understand a parking space if used for rental would qualify. As always, if the exchanged properties are diverted from productive or rental use to personal use, it could invalidate the 1031 exchange.
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