Home
Tax Articles
Tax FAQ
Introducing Our Firm
Our Services
Real Estate Taxletter
Need Help?
Other Websites
Site Map

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+

What happens when a residence is exchanged?

June 9, 1999


From:  Richard Ault
Date:  Tue, 08 Jun 1999

I would like to know about the tax consequences under the new (1031) law when a private residence is exchanged for another more costly residence. What is the tax exposure of the higher valued exchanger when he trades down and what, if any, are the tax consequences of the individual trading up? Can a three way exchange be arranged with all items being owner occupied residences? How about an investment property (ie. 4-plex) and two owner occupied residences in 3-way exchange?

Ric Ault

Answer

Date:  Wed, 09 Jun 1999

Hi Ric,

Apparently, you have been misinformed.

A personal residence does not qualify for a tax-deferred exchange under IRC Section 1031. The only way to bring the transaction under Section 1031 is to convert the residence to income producing property, such as a rental, for some time before making an exchange.

Please visit our site again. There is an article in the personal tax planning section called Your Residence--The Ultimate Tax Shelter? Although the article needs some update, the basic rules relating to the sale of a principal residence are discussed there.

Good luck to you!
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 happens when a residence is exchanged?

Home | Real Estate Taxletter | Articles | FAQ | Introducing Michael Gray, CPA | Need Help? | Other Links


Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128-4512
(408) 918-3162
Fax (408) 998-2766
email: mgray@taxtrimmers.com
© 2016
Subscribe to
Michael Gray, CPA's
Real Estate Tax Letter
!

subscribe
unsubscribe