All Forum Posts by: Joe Rest

I was planning to use a 1031 exchange for the sale of a rental property I own fully (no mortgage). Reading about the criteria to match to have a fully deferred exchange I am afraid I need to reinvest all the proceeds I will receive and not only the actual profit (including depreciation recapture). If I sell a property for 300K (minus fees) do I need to invest all the 300K and not just the profits? I am afraid so and this would not make it attractive for me.

1) Taxpayer must buy replacement property(ies) of greater or equal value

2) Taxpayer must reinvest the proceeds from the sale of the relinquished property(ies)

3) Taxpayer must re-acquire debt equal or greater to debt paid off from the relinquished property (or replace the debt with additional cash)

I am trying to figure it out how to identify the total recaptured depreciation to report for tax purpose as result of the sale of rental property. The first realization is that this is a TOTAL recapture depreciation and not just the larger one coming from the building; correct? Basically I need to account for all the smaller items (sink, washer, dryer, carpet) even if those items were fully depreciated years ago? Some items are not even anymore in the house i.e carpet replaced with tiles..

The tax software I use H&R does seem to just show the depreciation summary for each year and not the total. I am afraid I need to go through all the 10 years of rental history and do some math!!

Reading Section 1250 I believe that the recaptured depreciation will be taxed at ordinary capital gain (with max of 25%) while the rest of the profit as long term at 15%. Can I offset the amount taxed at 25% tax with short term capital loss I have been carrying on Schedule D?

H&R does not inspire confidence in this .. they just have a note " use business asset sold topic"

thank you for your competent answer. 

I am glad you as a professional confirmed that it is possible. You can not believe how many incorrect answers you find with a google search on this subject..

I am the sole proprietor of single-family used as a rental soon to close. The sale price will be 300K and profit of 200K. I would like to relinquish the property replacing it with multiple properties bought with a friend.

Is it possible to have a title change with a 1031 exchange? No LLC, just TIC with appropriate ownership %. Is it true that the new ownership can change as far as teh transaction maintains the tax identity; the TIC with % ownership allows this.

To maximize the tax advantage I understand my ownership part should be at least 300K. What is the minimum down payment (equity) I need to own from the start? Is it the equity=200K and the rest of my ownership could be through a mortgage?

thank you

I am a W-2 employee and I own few rental properties. 

It is not clear to me if the income limits for the 20% deduction (Individual income $157,500 or joint filer income of $315,000) are related to the total individual income or to the portion of the income coming from all him/her pass through business.

I tried to decipher the actual tax bill but it is really complicated. 

PART II—DEDUCTION FOR QUALIFIED BUSINESS 7 INCOME OF PASS-THRU ENTITIES