1031 exchange on an inherited property

[Kevin Carrington]

Hey BP, 

My wife and I have inherited a property that is split three ways with other family members. We have considered renting it, but it is a condo and the HOA will not allow any more rentals. If we sell the property and split the profit three ways, can we take our portion of the profit and roll it into another property to avoid the taxes on it? Thanks!

[Joseph Dzwiniarski]

CPA here (not a tax accountant though) that just went through this working on trust documents.

If you inherited the property the tax basis of the property will step up to the fair value of the property upon the owners death. So you will likely owe 0 taxes.

 If the property is still in a living trust the basis won't step up upon death and 1031 of the proceeds is advised if you sell the property.