Discussion:Sale of residence acquired in 1031 exchange
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Discussion Forum Index --> Tax Questions --> Sale of residence acquired in 1031 exchange
TaxAssistCPA (talk|edits) said: | 18 January 2006 |
| My client acquired a house in a 1031 exchange in 2003 and then converted it to his primary residence. According to the 2004 tax act, he will have to own it for 5 years before getting the exclusion of gain, rather than the usual 2 out of 5 years. Does anyone know of any technical corrections or exceptions that might apply? He is especially unhappy because he acquired it in 2003, thinking he could own it one year as income-producing property and then live in it for two years as a personal residence, selling it in 2006 with no gain. As I see it, he would have to wait to sell it in 2008, having owned it for 5 years. Any ideas? | |
| 18 January 2006 | |
| There was a recent technical correction to the subsection to which you are referring. The correction basically makes it clear that the 5-year holding period applies not just to the taxpayer, but it also applies to any individual who acquires the property by gift. | |
| 19 January 2006 | |
| I was told that since the buyer has already taken tax advantage of 1031 exchange, "the 5-year holding period applies..." No double dipping. Uncle Sam is one step ahead of us. | |
| 17 September 2009 | |
| I have a similar situation.
Client acquired residential property in LKE in 2007 with the intention of using it as a rental. Now, she is thinking about making it her personal residence and wonders what effect the LKE will have if/when she sells the property. From what I understand based on pub 523, the exclusion is disallowed if the property is acquired in an exchange AND the property is sold within 5 years of acquiring it. So, am I correct with thinking that if she owns the property for 5+ years (and lives in it for at least 2 years out of the 5), in the event that she sells the property, the gain exclusion applies? | |
| 17 September 2009 | |
| you're forgetting about those new 'nonqualified use' rules, aren't you? | |
| 17 September 2009 | |
| ...apparently so...?
Remind me to temporarily retire from accounting the next time the administration shifts... Where can I find the nonqualified use rules? | |
| 17 September 2009 | |
| well, I used the yellow search box, and in 2 seconds found this: Discussion:What is "Nonqualified Use of Home?" | |
| 17 September 2009 | |
| I see. So essentially, the sooner she converts it to her personal residence, the less this new legislation will effect her.
Thanks. | |
