Selling foreclosure property

[Michele Foreman]

We have a house in Iowa that we bought three years ago as a foreclosure for $7,500. We put around $5,000 into it. We were originally planning on renting it out but decided we don't want the headache of tenants and we just want to sell it. It will probably sell for at least $80,000. How much would we pay in taxes if we do sell and would this qualify for a 1031 exchange if we find another property or would we need to rent it out first? Thankyou

[Darson Grantham]

@Michele Foreman, I'm not sure of your overall/longterm goals, but you might consider selling it on contract.  With those numbers, you could create a pretty steady stream of income, similar to a rental, with typically less hassell.  I know in Iowa sale on contract is pretty simple and there are absolutely buyers out there.

This would alleviate you from HAVING to buy a house with the funds to eleimate the high tax gains.