1031 exchange advise

[Spearchunker]

ok, I have gotten 3 different answers from 3 different exchanges and CPAs.

I have a primary residence in Dallas County.

I have 74 acres in Oklahoma with a Brando. The Oklahoma property is being bought by a developer. It was not for sale, but stupid money has a voice. They contacted me and started throwing money at me. Its 1000% more than what I have in it over last 2 years including purchase. So I have to sell...just have to.

Can I yes or no exchange that money into another lake house / recreational property? neither one is income producing, but in my mind investment property.

Help me TBH brain trust.

[TransPecos]

Short answer is yes, as long as you jump through the required 1031 hoops.

Congrats on buying in the right spot!

[mfarmer]

What if it was listed on VRBO (or your own independent listing) as a Short Term Rental and always booked and never available???

[W E H]

yes

[bsills]

It seams with taxes as low as they are now I would just pay my taxes and be done. If they go up to 45%, like they want to do, you will be paying about 25% more.

But to answer your question i believe you can.

[Rustythebeagle]

Yes. Previous guidance was wrong.

"Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of
the same nature, character or class. Quality or grade does not matter. Most real estate will be
like-kind to other real estate. For example, real property that is improved with a residential rental
house is like-kind to vacant land. One exception for real estate is that property within the United
States is not like-kind to property outside of the United States. Also, improvements that are
conveyed without land are not of like kind to land."

https://www.irs.gov/pub/irs-news/fs-08-18.pdf

[stxbowhunter]

Yes - my CPA has always advised me that the new property has to be like in kind or an upgrade. That way you're not purchasing a new property of lesser value and pocketing the profit without paying capital gains tax. I've done a few of them and never had any problems.

Edit: all of mine are income producing rentals though

[Chance Love]

"Like-Kind" does't mean what most people think it means. You don't have to go from a ranch to a ranch, or from an apartment complex to another apartment complex, ect. Like-Kind = real estate. Real estate is real estate. Heck, even minerals are "real estate". Lots of ways to skin that cat.

Not pointing fingers at anyone on this thread. Just something I have dealt with for a long time. Carry on.

[SaintBlaise]

I think 1031's are for commercial property only. Like to like. Is the OK property residential or commercial? Is it "a" residence of yours? On your primary residence you can write off the first 250k of gains, 500k for joint returns. Here is an article that may help. If you stay there for some amount of time, it could qualify for the 250/500 exclusion. Not the 1031.

https://www.irs.gov/taxtopics/tc701

[TeamAmerica]

If i was your CPA, i would say yes, you are fine. The fact that you have a primary residence is a good fact to confirm that these are both indeed held for investment properties. did you have debt on the OK property? if so, you will need to reinvest the Value and the cash to get full deferral. If you paid off debt and do an all cash deal on a new less valuable property, only part of the gain can be deferred.

[rferg84]

You need to talk to a CPA who does them.

My business partner is a CPA and we use a different CPA for them.

[TildenHunter]

As most have said, yes you can do a 1031 exchange.....not sure though if you sell a property for $1MM and then turn around and buy a property for $350K. If you were selling for $350K and buying for a $1MM it would be no big deal. I was under the impression that all of the proceeds from a sale had to go towards the purchase of a different property.

[M16]

I use this company. They have been great to work with.

https://www.ipx1031.com/

[rferg84]

As most have said, yes you can do a 1031 exchange.....not sure though if you sell a property for $1MM and then turn around and buy a property for $350K. If you were selling for $350K and buying for a $1MM it would be no big deal. I was under the impression that all of the proceeds from a sale had to go towards the purchase of a different property.

Its not even proceeds, it's total sale amount if I'm not mistaken.

So if you sell for $1m but owe $500k, to exchange it all you'll still have to buy a property worth at least $1m or the difference is still taxable.

Like you can't take your $500k equity and exchange it directly for a $500k property.

I've been wrong before though. I pay smart people to handle this stuff for me.

[TildenHunter]

Its not even proceeds, it's total sale amount if I'm not mistaken.

So if you sell for $1m but owe $500k, to exchange it all you'll still have to buy a property worth at least $1m or the difference is still taxable.

Like you can't take your $500k equity and exchange it directly for a $500k property.

I've been wrong before though. I pay smart people to handle this stuff for me.

You are correct. I don't even think it is possible to take a portion and roll it forward and be able to be taxed on a portion. I have been told it is an "all or none" deal. I too would consult a CPA that is familiar with the most up to date regulations. I just assumed if they were paying 10x over what he had in the property that he was more then likely the outright owner.