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Tax-Deferred Exchange |
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Dear Edith Lank: I bought a condominium 20 years ago in which I lived for five years and have since rented out. I have listed it as rental property and depreciated it each year at tax time. I have paid off the mortgage. My current tenant has expressed an interest in buying the Unit and I am told that the capital gains would be about 18 - 20 percent of the sale price.
Would the capital gains be deferred if, with the money from the sale, I purchased another property (either another condo or a house) that I would rent out again? If the answer is yes, how soon would this other property have to be purchased? |
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For a Section 1031 tax-deferred exchange of like-kind income property, you must identify the replacement within 45 days of the sale of your condo, and complete the second transaction within 180 days. Strict paperwork requirements apply, and you need a qualified intermediary to hold any money involved in the interim
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Edith
Originally published on February 6, 2006 |
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