1031 exchange or take the capital gains

[Shane Griffin]

First, allow me to introduce myself. My name is Shane Griffin and I am an investor currently living in Bryan, Texas. I have one rental property (which I will discuss below) and I am currently living in a fix and flip while working a full time job. I have been floating around the forums/podcasts for a year or so learning from each of you.

I am about to sell one of my rental properties and trying to decide if going with a 1031 exchange would benefit me or if it would be wiser to just pay the taxes now. I purchased this property in June 2013 as my primary residence and turned it into a rental in 2014.

See below numbers.

Original Purchase price (2013) - $134,900

Improvements - $12,000

Sales Price (FSBO) - $157,000

2014 Depreciation - $3,350

~$1500 - 1031 Exchange - Differ capital gains and depreciation recapture but pay an intermediary fees

$2200 - Taxes from sell. $838 (Depreciation recapture $3350 @ 25%) $1965 (Capital gains Realized gain ($13,450) - Depreciation ($3350) - Fees at closing ($1000 owners title insurance) @ 15%)

My questions are:

1. If I am selling the property this June, will I depreciate the home on my 2015 taxes for half of the year? If so, this would increase the depreciation recapture to $1260 ($5025 @ 25%) and total taxes to $2621

2. If this were your property what would you do? Am I missing anything in my calculations?

Thanks in advance,

Shane Griffin