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Posted by L K Williams on April 26, 2007, 2:11 am
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> We have a vacation rental house in Hawaii that we are
> considering doing a 1031 exchange for another vacation
> rental. It is customary there for houses to be sold/bought
> as turnkey, with all furnishings, dishes, etc. From a tax
> perspective, I think the furnishings should be treated as an
> additional sale, but logistically that can get a bit
> complicated. Furniture is depreciated on different
> schedules if bought at separate times. Kitchen items,
> barbecue, etc. were simply expensed when purchased. Is it
> possible to exchange a furnished house for another furnished
> house and consider the entire thing as exchanging like for
> like? Or is it possible for tax purposes simply to forget
> about the furniture and "give" it to the new buyer? There
> must be a simple way to do this.
I practiced in Hawaii for many years before moving to
Thailand and I did returns for a number of clients there.
Unless the furniture was treated as a separate asset (and
depreciated over a shorter life) it was always treated as a
unit. If it was depreciated separately, it has to be
accounted for separately but I never excluded it from the
exchange. Likewise, it does not matter if the replacement
property is purchased furnished or unfurnished.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
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