Discussion:Gift tax, 1031, capital gains

For example:

Siblings A and B jointly own a condo with a basis of 150,000 that is now worth 350,000 with a loan of 100,000.

They would like to gift this property to sibling C who has been living there on and off for the past few years. HOwever sibling C needs to move to a different city soon.

Questions: 1. if siblings A and B did a 1031 exchange for another property worth 500,000 with an increased loan to 250,000. How long do A and B need to wait before gifting new property to C. How much is the basis now, and how much will be considered a gift? WIll sibling C be able to take over the loan? What kind of a deed will need to be made?

And how long will C have to live there after the gift before being able to sell as their primary residence?

2. if siblings A and B gifted the original property to sibling C, what kind of deed needs to be completed and can C assume the original loan on the property? WIll C need to acquire a new loan first, to pay off the old loan, then have A and B gift the remainder of the property to C? What is the procedure for this? Also, if C uses this property as it's primary residence, and already has been 1 year prior to the gift, how long does C need to wait to be able to move and sell the property for a new house with paying the capital gains?

1031 exchanges are allowed for business or investment property. If the relative was living there, is it really a rental (to qualify for 1031 property?). There are holding requirements after an exchange so, if the property qualifies, giving the gift to early could disqualify the exchange.

To the last point, I believe the holding period for primary residence would begin the day of the gift. So to avoid CG on the sale C will have to live there for two years. C had no ownership interest or liability for the loans so any time living there does not count.