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Old 04-16-2014, 10:35 PM
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1031 Proceeds, Realized gains, and boot

I will try to simplify question.
I waited to call tax man today, after the rush, and I found out he left on vacation for two weeks. Please respond only if you are a tax professional:

Simple version
1st property = 200000
Downpayment = 40,000
crap load of expenses and tons of write offs = xxxx
Sales price 350000
Selling expenses 20000

Ending proceeds (money received) at end of sale = 140000
CPA said that my taxable gain is 100000

140000 went straight into the 1031 exchange.

Do I have to invest the full 140000 cash in exchange to avoid taxes?
If my taxable gain is 100000 (remember I put 40 down to start), then can I reinvest 100000 into a new property and take 40000 out of the exchange later and not pay tax on the 40000 since the 100000 invested matches the taxable gain. I know about the term "cash boot" but every site I see says I must pay taxes on the cash boot. If 100000 was invested, wouldn't it be extra?



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Old 04-17-2014, 10:23 AM
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Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by L1031 View Post
I will try to simplify question.
I waited to call tax man today, after the rush, and I found out he left on vacation for two weeks. Please respond only if you are a tax professional:

Simple version
1st property = 200000
Downpayment = 40,000
crap load of expenses and tons of write offs = xxxx
Sales price 350000
Selling expenses 20000

Ending proceeds (money received) at end of sale = 140000
CPA said that my taxable gain is 100000

140000 went straight into the 1031 exchange.

Do I have to invest the full 140000 cash in exchange to avoid taxes?
If my taxable gain is 100000 (remember I put 40 down to start), then can I reinvest 100000 into a new property and take 40000 out of the exchange later and not pay tax on the 40000 since the 100000 invested matches the taxable gain. I know about the term "cash boot" but every site I see says I must pay taxes on the cash boot. If 100000 was invested, wouldn't it be extra?
will try to simplify question.
I waited to call tax man today, after the rush, and I found out he left on vacation for two weeks. Please respond only if you are a tax professional:

Simple version
1st property = 200000
Downpayment = 40,000
crap load of expenses and tons of write offs = xxxx
Sales price 350000
Selling expenses 20000

Ending proceeds (money received) at end of sale = 140000
CPA said that my taxable gain is 100000=====>>>>>>>>>>It depends on the situation;UNLESS the pty is personal use capital asset, I mean primary home, it need to recapture so called unrecapture rea esttae depreciation, actually this is NOT sec 1250 depreciation but it is treated like that on f 4797.your taxable gain I guess is $100K as cpa said; $350K-$200K-$20K-$30K(sec 1250 depre))
sec 1250 gain is taxed ass ord gain NOT as LTCG so it is taxed at 25% if your tax bracket is 25% or higher


140000 went straight into the 1031 exchange. =====>>>>>>>>>>>>>; for 1031 ex, the value of the like-kind property must be equal to or greater than the sale price of the new property. That is, whatever property you want to buy must be at least the same value as the property you wish to replace. If the replacement property is of lesser value, there will be a tax liability;you must use all equity gained in the transaction for the purchase of the like-kind property. That is, any gain from the sale of the old property must be used to buy the new property. If any part of the equity gained is not used for this purpose, there will be a tax liability. If either one of the previous rules is not met, you can still qualify for a partial tax deferral
=


Do I have to invest the full 140000 cash in exchange to avoid taxes?
If my taxable gain is 100000 (remember I put 40 down to start), then can I reinvest 100000 into a new property and take 40000 out of the exchange later and not pay tax on the 40000 since the 100000 invested matches the taxable gain. I know about the term "cash boot" but every site I see says I must pay taxes on the cash boot. If 100000 was invested, wouldn't it be extra?=as mentioned above.as said your taxable gain is gain after sec 1250 depre recaptured.



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