That means that any gain on sale would be taxable at ordinary income rates.To avoid that, the property would have to be converted to rental property prior to the exchange.You might want to reach out to one of 1031 experts on these forums for more information.

@Jim Macedon The contract should have all this laid out and will be the "go to" if something out of the ordinary happens.

You are going to pay tax at your ordinary income rate (depending on your income and if you are filing single or MFJ).

. $650 x 2, and $550 x 1 (10 yr tenant).All units are:  2/1.5/0 with patios, and 2 parking spaces.Ask:  $220k (55k/unit) --- similar aged duplexes are listed for 60-70k/unit, but small MF 8-units in C/C- areas are listed from 28-35k/unit.Total square footage ~4400Taxes:  $2800Owner pays sewer/water:  $250/mo averageInsurance quote I got was:  $3636/yrFiguring 8% for PM, and 10% cap ex and 10% maintenance/repairs.The vacant unit was in very good condition, but had not been updated in several years. 

I own a business flipping vacant land properties so according to the irs I am a real estate dealer and my income is taxed as ordinary income which includes the full 15% self employment tax. 

Here are the issues:- Dogs left outside, barking 24/7; police have been called at least 20 times; 4 neighbors getting ready to file a lawsuit- Started paying rent late, now 2 months in a row; never emailed or called us to inform of late payment- Not maintaining yards front or back; lawns are dead, weeds everywhere, trees overgrown- Parking "toys" outside and on the street (boats, SUVs, trucks, cars, golf carts, etc)- Leaving furniture and garbage everywhere outside (on the front patio, side yard, front yard -- everywhere!)

For those who use lines of credit, is that only for acts-of-god types of repairs or vacancies, or for ordinary capex, like a new roof?  

If this were an ordinary mortgage, she could just make the payments and keep the property. 

Assuming you operate your rentals as an individual or through a pass-through entity (sole proprietorship, LLC, partnership, S Corp), rental income is taxed at your ordinary rates (based on your tax bracket).

Desirable amenities include ceiling fans throughout, including back patio, covered back patio, sprinkler system, and remote entry two-car garage.