1031 Improvement Exchange

[Ben S.]

So if I currently have a rental property that I purchased for $65k and spent $50k improving and I sell it a it a year after buying it for $250k in order to buy a rental property that costs $100k and needs $150k in improvements to then be worth about $400k, does all that work with a 1031 exchange?

Is the higher value rule the sale price of the current property compared to final appraised value of the new property? Or is just based on sale price and improvement cost of the new property?

I know I need a QI and have to do everything within the time requirements, just not sure when improvements are involved what numbers I'm using to make sure I defer 100% of the taxes.

Thanks!

[Dave Foster]

@Ben S. said  is that it would have to be complete within 180 days of when you sold the old property and established the exchange.  They're more expensive than a regular straight exchange but will save you a truck load of money in tax on that extra $150 that could be included in rehab.