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Updated almost 6 years ago,
Taxing non-capital gains?
I bought a rental property for 100k 14 months ago. I put roughly 20k into it in renovation expenses. For discussion, let's just say all other expenses sum to be 10k (interest expense, etc.) for a total of 30k in expenses. I'll begin to realize my gain after 130k. After paying on the note for a year the outstanding mortgage is 70k.
A buyer is willing to pay 200k for the house giving me a gain of 70k. I want to buy a lot that costs 75k. Can I exchange the 70k gain from the rental property into the lot and avoid paying tax on it? Will I be taxed on the 60k (30k of equity and 30k of expenses) that I received back? Will I have to also exchange this into a new property?
thanks!