1031 Exchange question

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Subject Author Date 1031 Exchange question Diogenes 07-09-2009  Re: 1031 Exchange question Diogenes 07-09-2009
Posted by Diogenes on July 9, 2009, 2:03 pm Please log in for more thread options 1031 Exchange: My understanding of the 1031 exchange process is illustrated in the example below. Is there anything that is misstated or incorrect? Day 1: Sell rent house with funds going to a qualified intermediary. The house cost $ 100,000 and is fully depreciated so the basis for gain/loss is zero. Day 45: Identify the Replacement property ( new rent house) which will cost of $ 200,000. Complete the “identification of Replacement Property” and give it to the qualified intermediary. NOTE: this can be done before the 45th day if the replacement property is identified earlier. Day 180: This is the deadline. The replacement property must be acquired by the 180th day. There will be a deferred gain of $ 100,000 on the old house. The new house will have a depreciation basis of $ 100,000 ($200,000 minus the deferred gain). NOTE: The $ 100,000 basis assumes NO value for the land. If the land was worth $25,000 then the depreciable value would be reduced to $ 75,000. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Diogenes on July 9, 2009, 4:20 pm Please log in for more thread options Diogenes wrote: > 1031 Exchange: > My understanding of the 1031 exchange process is illustrated in the > example below. Is there anything that is misstated or incorrect? > Day 1: Sell rent house with funds going to a qualified intermediary. > The house cost $ 100,000 and is fully depreciated so the basis for > gain/loss is zero. > Day 45: Identify the Replacement property ( new rent house) which > will cost of $ 200,000. Complete the “identification of Replacement > Property” and give it to the qualified intermediary. NOTE: this can be > done before the 45th day if the replacement property is identified earlier. > Day 180: This is the deadline. The replacement property must be > acquired by the 180th day. > There will be a deferred gain of $ 100,000 on the old house. > The new house will have a depreciation basis of $ 100,000 ($200,000 > minus the deferred gain). NOTE: The $ 100,000 basis assumes NO > value for the land. If the land was worth $25,000 then the depreciable > value would be reduced to $ 75,000. >ADDITIONAL INFORMATION: The old house was sold for $ 100,000. New house was purchased for $200,000 consisting of the $ 100,000 from the old house plus a mortgage payable for the $ 100,000 balance. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted 1031 Exchange Question April 20, 2008, 10:20 am 1031 Exchange September 18, 2008, 8:52 am 1031 exchange or other alternatives February 27, 2007, 3:17 pm 1031 exchange of turnkey rental April 25, 2007, 3:58 am Sale of residence - 1031 exchange June 3, 2006, 9:44 am 1031 exchange for LLP's, Oil and Gas Royalties. September 28, 2009, 11:48 am Banking & Finance: 1031 exchange cause of LandAmerica meltdown December 8, 2008, 12:35 pm 1031 Starker tax free exchange and AMT: does boot trigger AMT even with other offsetting capital gain losses? April 19, 2007, 3:52 am 1031 Question December 13, 2006, 10:00 pm 1031 and stocks March 18, 2007, 2:18 am