Federal Tax

  • 1.  1031 Exchange Question

    Posted 09-14-2016 12:49 PM
    Edited by Gus Hatzistefanidis 09-14-2016 12:52 PM

    Hello all, I have a question regarding 1031 exchange, heres the scenario:

    The tax payer currenly owns a residential real estate building for 15 years. The tax payer sells the residential building and is in contract to buy another residential real estate building (referred to as [A]) and wants to treat this as a 1031 exchange.

    At the same time, the next door building owner offers an extra $1million to buy building [A] that he's in contract to buy.

    The tax payer is looking for another real estate rental building [B] and wants to treat that one as a 1031 exchange as long as all other conditions are within the 1031 rules.

    Can the taxpayer avoid capital gain from building [A] sale? In essence, he wants to do an exchange for Building A, and then meet all the conditions and immediately sell A to buy building B.

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    Gus Hatzistefanidis
    CPA
    KOSTAS HATZISTEFANIDIS, CPA
    Astoria NY
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  • 2.  RE: 1031 Exchange Question

    Platinum Most Valuable Member
    Posted 09-14-2016 02:45 PM

    Gus:

    If your client already sold the first building and received the proceeds, he is not eligible. He should have used a third party intermediary.

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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY



  • 3.  RE: 1031 Exchange Question

    Posted 09-14-2016 03:48 PM
    Edited by Gus Hatzistefanidis 09-14-2016 04:43 PM

    Hi Robert, thank you for the response.

    He did use an intermediary for the first exchange. Everything was done properly on that end.

    The question is really if he is eligible to exchange an exchanged property almost immediately after it being exchanged assuming all other variables are met.

    So ultimately what I am asking is if there's any limitation in exchanging immediately a 1031 exchanged property assuming all the normal variables are met?

    I should also clarify that he is not in the business of exchanging properties, he held the original one for several years, and this is a one time thing, he is not a dealer.


    Thanks!

    Gus

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    Gus Hatzistefanidis
    CPA
    KOSTAS HATZISTEFANIDIS, CPA
    Astoria NY



  • 4.  RE: 1031 Exchange Question

    Platinum Most Valuable Member
    Posted 09-17-2016 11:31 AM

    Gus:

    Give me a call when you have a chance, as I can probably point you in the right direction.

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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY



  • 5.  RE: 1031 Exchange Question

    Silver Most Valuable Member
    Posted 09-18-2016 03:57 PM

    The replacement property must be held for investment.  There are ways to structure this transaction.  I assume the 45 day period for designating and identifying the replacement property has expired.

     

    Very truly yours,

     

    ROBERT S. BARNETT

     

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