Rather than realizing the $100k gain plus any depreciation recapture, I bought a property for $500k through a 1031 exchange.

Even if the intent is to convert this into a rental upon grandma's passing, you still would like the step-up in basis unless you plan of lifetime of 1031 / 721 exchanges.

Additionally, there's a fixed self-employment tax.Income Tax: 22% * $70K = $15.4KSelf-Employment Tax: 15.3% * $20K = $3.06KTotal Tax Due: $18.46KRemember to account for any state taxes as well.To defer taxes entirely, you could utilize a 1031 exchange, which allows you to reinvest the proceeds from the sale into a similar investment property, thus deferring the tax payment until a later date.Example #2: Long-Term Capital GainsNow, consider a scenario where you hold onto the property for over a year.Project Details:Property Cost: $70KRenovation Costs: $50KResale Price: $200KProfit: $80K ($200K – $50K – $70K)Since self-employment tax doesn't apply, you only need to calculate the long-term capital gains tax.

Hey everyone - been a long term rental investor since 2005 and now looking to diversify in STRs (aiming for the Smokies to start) later this Summer through a 1031 exchange.  

I don’t see the sense in paying off my own house at presumably low interest rates, and exchanging that for a higher rate, variable interest line…unless I have a really good plan for not losing my house.  

And maybe buy 2 or 3 properties with each 1031 exchange if you can find some they cash flow.

No, if you’re an LP in a real estate fund or shareholder in a publicly traded REIT, you won’t qualify for a 1031 exchange.

Now, very profitable with $4,000 rents and low monthly payments.Passively considering a sale to do another 1031 exchange.

Are you planning to do a 1031 exchange or a trust deed to avoid/ minimize the property gain tax?

In exchange, I’d be able to be sort of an intern or someone to help with boots on the ground here in AZ.