1031 versus Capitals Gains

[Peter Pitrone]

I recently retired and I am unable to do maintenance work on my 3 family home. I purchased it in 1985 and have been living in 1 apt as my primary home and renting out the other 2 apts. when I purchased it I paid 15,000.00 dollars and have to do over all 3 apts for a cost of 150,000.00 over all these years. I have been taking the depression for it over the 34 years. Now that I'm unable to maintain it I'm thinking of selling an buying 2 condos north and south 1 primarily for living and one for 2nd home  

I know 2/3 is going to be capital gains and some getting to be written off for work done, what would be my best route to attack my problem 

Bite the bullet and pay the capital gains / really don’t want to go 1031 because I think I’ll be back in the same position 

[Dave Foster]

@Peter Pitrone, 1/3rd of that property sale will be tax free.  I'd use that portion to buy a new primary residence condo (up north).  Then you could sell and do a 1031 exchange the other 2/3rds (or however the allocations worked) and purchase a vacation rental condo down south that you use some for vacation and generate some rent as well.  

There are any number of types and models for this ranging from condos that you self manage all the way to condotels that are totally central managed and even give you the option of use of other units if yours is booked when you want to come down.

In any case, the key is that you will get to defer all tax and depreciation recapture in that 1031 exchange.  And that could be a game changer for you.