The 1031 Adviser: Converting 1031 Replacement Property into a Principal Residence It’s not uncommon for an investor to convert a property held for business, trade or investment into a principal residence. Change in investment potential of the property, or a desire to get out of the landlord business, might make the investor decide to
Second Homes and the 1031 Exchange A 1031 exchange can be used to defer capital gain and depreciation recapture taxes on the sale of property held for business, trade or investment. The guidelines for a successful exchange must be followed carefully or the IRS may disallow the exchange. I am often asked whether a property
A like-kind or 1031 exchange is a powerful tax strategy to create enormous wealth over an investor’s lifetime. We discuss the rules regularly here in this forum, but one of the most common questions that causes confusion is the concept of “boot.” Let’s start with the basics, what is boot? Most of us have traded in a
Even the most attentive taxpayer can invalidate a 1031 exchange by — unintentionally — violating the “same taxpayer” rule. While simple in concept, a few examples show how mistakes can be made. Let’s start with the basic rule first. The “taxpayer” looking to defer recognition of taxes using an exchange must be the “same” both
A 1031 exchange is a powerful vehicle to build wealth by permitting taxpayers to defer capital gains, and depreciation recapture, through a properly executed transaction. But the rules governing exchanges are a “safe harbor,” meaning that the failure to comply exactly with these technical rules will violate the exchange and force the taxpayer to recognize
