1031 basis or basis 101? I dont know can I get witness!

[Jaime Nichols]

Thank you for your help!

Q) If a person lived in residence for 10 years, paid the property completely off, and wants to move to another state,

Does the basis include the interest and repairs on the home?
Also if the home is 4x what was initially paid, Is the deferred allowance for the cap gains or the the sale price?
If it was a res, can they buy a investment and res?

Thank you much super genius BP people!

[Bill Exeter]

I assume from your post that the property was always held as your primary residence, so the 1031 Exchange would not apply since the property was not held as rental or investment property.

You would fall under Section 121 of the Tax Code ("121 Exclusion"), as indicated by Steve.

If your gain exceeds the $250,000/$500,000, the excess amount would be taxable unless you have converted the property to rental/investment property and would be able to do a 1031 Exchange (Revenue Procedure 2005-14).