When selling an investment property can you take money from purchase than put some $ into new investment?

Question

without capital gains tax?

Answer 1

You can DEFER capital gains on the sale of an investment property using a Like-kind exchange (or 1031 Exchange). This is a procedure that must be done properly, within very strict guidelines and timelines, but if done properly, you pay no gains until you sell the new property. Check out the IRS website like below, and since part of the procedure is that the money cannot ever touch your hands, but must go through a qualified intermediary, you might consult someone who does 1031s professionally. A 1031 exchange can cost a few thousand dollars, so make sure your gain on the property you're selling will be enough to make these fees worth the money, given the low cap gains rates right now.

Answer 2

Certainly capital gain taxes can be deferred via a 1031 exchange of like kind or substantially like kind properties. 1031 exchanges are a whole industry in itself.

You also have to consider, however, whether the sale will trigger a recapturing of the depreciation amounts taken in prior tax years. I am not sure of the specifics, but if you only owned the property for a short period of time, the IRS recaptures the depreciation amounts in that current tax year.

I am not sure if that applies in a 1031 exchange but it is something I highly recommend verifying with a professional before proceeding. Otherwise you could find yourself owing a significant amount of money if you have been taking that write off!

Answer 3

Nope , once you realize gains , you pay the tax .
The exception is for the sale of the primary residence that has been held for at least 2 yrs .

Possibly an exchange of property would work if no $$$$ changed hands .
But always ask the IRS , Not us . . .

http://www.irs.gov/


>