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What must I charge for rent to make a 1031 exchange?

September 13, 2006


From:  Linda
Date:  Sat, 17 Jun 2006

If I make a 1031 exchange and buy a condo that I rent to my son, what is the amount of rent I must charge?

Answer

Date:  Fri, 07 Jul 2006

Hello Linda,

The rent has to be at fair market value based on similar properties in your area. The real estate agent who is helping you with the transaction may be able to help you compile information supporting the amount you charge. Make a written lease. (Why are you creating additional risk for a tax-sensitive transaction?)

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

What must I charge for rent to make a 1031 exchange?

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