All Forum Posts by: Lauren Speidel

Jimmy Domer You also can sell and buy as many properties as you’d like.

Jimmy Domer - as Joshua Wright mentioned, the total exchange timeframe is 180 calendar days. You have 45 days to identify potential replacement properties and another 135 days to close on at least one of the properties.

James Harris The IRS doesn’t mandate that you hold your relinquished property for a certain amount of time. Although, most QIs will recommend you hold the property for rental income, appreciation, or use in a trade or business for at least 12-24 months to prove your intent. Being on title for a short period of time may increase your audit risk. Your intent is key with your situation. Intent can change and if you received an unsolicited offer for this property and it financially makes sense, it may be N option for you. If you do decide to do a 1031 Exchange with this property, I would make it a point to keep any records or emails documenting your initial intent to rent this property.

@Joshua Wright - Thank you for the mention! @Robert Johnson I'd be happy to discuss your transaction in more detail. Like Josh mentioned, an option for a 1031 exchange, when the replacement property is less than the relinquished property, could be a DST (Delaware Statutory Trust). If you are an accredited investor with $1M net worth, not including your primary residence, you could take the 50K and invest into a DST. This type of investment is provided by real estate companies where you purchase a percentage ownership in a real estate portfolio. Usually these products will range in sector, estimated hold times, leverage amounts, expected returns, etc.. Josh can certainly discuss these products with you in further detail as you must purchase them through a Financial Advisor or Registered Independent Advisor.

In regards to cost, on average, most QIs hover around the $1,000 mark. If you are considering another QI, due to cost, please let me know.

@Sarah King If you have lived in house #1 for 24 out of 60 months you may qualify for the 121 primary residence exclusion. It allows you to exclude $250k (if single) and $500k (if married) of gain from your income. Therefore you may already be in a situation where the gains aren't taxable. Do you expect to see more than $250k/$500k gain on this property?

Tim Mospanyuk One requirement when completing a 1031 is that you can prove to the IRS, if audited, you had the intent to rent the relinquish property, hold it for appreciation, or use it in a trade or business. Usually fix and flips or property that you purchased with the intent to sell will not fall under Section 1031 guidelines. Let’s say you move out of the property and rent it for 12 to 24 months then it may qualify for exchange treatment.

@Ouman You Thanks for clarification. So it sounds like she may qualify for the 121 primary exclusion but again, her gain exceeds that. She could move out, rent the property for 24 months, and sell within that fifth year. Then she may qualify for the 121 exclusion and also a 1031 exchange. Feel free to reach out should you have more questions about this type of transaction.

@Shiloh Lundahl - if she isn't currently living in the property, yes, she could move back into the property and live there for 24 out of 60 months to qualify for the 121 primary exclusion. But there is a limit to how much you can exclude from ordinary income. It looks like she will be well beyond that amount. If she's single, she can deduct 250k from ordinary income and 500k if she is married. Looks like her gain well exceeds that. If she is living in the property right now, she could move out, rent the property for 24 months, put the property up for sale and sell within that 5th year so that she can qualify for the exclusion and anything above that amount could qualify for 1031 exchange treatment.

@Ouman You If the property was her primary residence, yes, it will not qualify for 1031 exchange treatment. If she hasn't lived in it as her primary, if she has held the property for appreciation, she may qualify for 1031 exchange treatment. To complete a 1031 exchange, you don't necessarily have to rent the property, you could hold the property for appreciation. Is the property reported as her primary on her tax return?

@Avery Goodman If you have filed your 2017 return, you have stopped the ability to proceed with your 1031. Since the sale transaction took place in 2017 it is considered a 2017 transaction and therefore we recommend that taxpayers file an extension OR complete their 1031 exchange prior to April 15th.

If a property is held for one year or less, then sold for a gain, the short-term capital gain will be taxed at ordinary income tax rates. If an asset is held for more than one year, then sold for a gain, the long-term capital gain will be taxed at a maximum rate of 20%.

The proceeds you receive from the sale, when the QI releases your funds, will be treated as ordinary income for 2018.