I am preparing to sell a rental property for $350k, and I purchased it for $275k a decade ago. Will the capital gains be $75k for tax purposes? ====> When you sell rental property, you?ll have to pay tax on any gain (profit) you earn (?realize,? in tax lingo). The capital gain rate is 0% UNLESS your taxable rate is higher than 15% but it?d be 15% UNLESS your marginal tax rate is higher than 39.6%. of your tax rate is 39.6% then your LTCG tax rate?d be 20%. ALSO, , but to the extent you claimed depreciation on this rental property, some of your profits may be taxed at ordinary income tax rates. Since you took depreciation in the previous years, you must recapture unrecaptured depreciation ion the sale of the rental home, then, you claimed depreciation on this rental property, some of your profits may be taxed at ordinary income tax rates.
I want to do a 1031 exchange, but haven't found another property. What are the limitations on the exchanged property?=====>you must follow the strict 45- / 180-day guidelines for an exchange. Once you sell your property (relinquished property) you have 45 days to identify property(s) of equal or greater value. Once identified, the exchanger has 180 days from the you sold your property to acquire the property(s) identified (or 135 days from the end of the 45-day period).you basically need to acquire "like-kind" property. This means that it must be other qualifying forms of real estate. For example, you could sell a duplex and purchase a commercial property, or you could sell a piece of land and buy an apartment building. The property just needs to be "like-kind.
If you sell a property for $1 million, in which $500k was equity and $500k was debt, then you need to purchase $1 million or more worth of property. Furthermore, you need to use all the equity and replace all of the debt to defer 100% of the capital gains taxes.you may not receive cash from the sale. This is known as "constructive receipt" and would trigger a taxable event on those monies received. According to the IRS safe harbor provisions, you must use a Qualified Intermediary or QI an independent 3rd party who holds the sales proceeds and purchases the replacement property on your behalf.to facilitate the 1031 transaction.
Can I use the gains to add on to my second home?======> the provision is only for investment and business property, so you can?t swap your primary residence for another homeThe property sold (relinquished property) and the newly acquired property (replacement property) must be held for investment or business purposes. Therefore, you cannot sell your primary residence and buy an investment property, nor could you sell and investment property and purchase a primary or secondary home. The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind. If you receive cash, relief from debt, or property that is not like-kind, however, you may trigger some taxable gain in the year of the exchange.
Does it need to be a wholly new property to me?====>yues if you want; however, it does Not have to be wholly new pty to you but as mentioned above,you must acquire "like-kind" property. This means that it must be other qualifying forms of real estate. 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