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Flawless Section 1031 Exchanges For Over 27 Years |
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REAL-LIFE EXAMPLES OF OUR EXCHANGES |
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 Our
client owned his Relinquished Property in the name of a two member, Limited
Liability Company (LLC) and desired to acquire its new property in the name of
just one of the members of the LLC. This poses a problem for the Exchange
because the identity of the taxpayer MUST be the same in the Replacement
Property as it is in the Relinquished Property. If the members are going their
separate ways, get the property deeded out of the LLC before attempting the
Exchange. Do this well before the sales agreement is entered into.
[List of examples] |
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 It
is possible to convert your investment property to personal use without paying
capital gains tax, but remember, it takes planning and adherence to the rules.
Our client, in this case, after many years of ownership, sold a two family
rental property and acquired a replacement property in Florida. The new property
was a single-family, that they immediately rented to a third-party. They rented
it for two years and notified the tenant that they would not renew the lease. As
soon as the property was ready, they moved into it and made it their primary
residence. No tax triggering event occurred.
If the client later decides to sell the property and they have resided in it for at least two years and have owned it for five years, they will qualify for Section 121, personal residence exclusion. That exclusion is $250,000 for an individual or $500,000 for a married couple filing jointly. Revenue Procedure 2005-14 aligns Section 1031 and Section 121 for this treatment. Some recapture of depreciation may apply for deductions taken during the rental usage. [List of examples] |
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Of course, its use as investment rental property would still apply. |
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Our client located a single
family house in an attractive neighborhood outside of Chicago that she wished to
acquire for rental to her daughter. The daughter must pay fair market rent to
her mom, but the use of the property in our client’s hands was one of
investment.
Eventually, she can gift this property off to her daughter. This allows for the transfer of wealth while the mom can direct its benefits during her lifetime. |
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Edmund
&
Wheeler, Inc.
QI |
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Edmund and Wheeler is actively involved |
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| Edmund & Wheeler, Inc. headquartered in Littleton, New Hampshire (NH) is a Section 1031 Qualified Intermediary with over 27 years of experience. Edmund & Wheeler has completed thousands of successful exchanges in 47 states. George E. Foss III and Christine S. Latulip are the firm's principals bringing with them decades of experience in finance, tax issues, banking, real estate and most importantly are proven experts in all things Section 1031. This site contains real-life examples of successful exchanges, industry insight, detailed case studies of exchanges, Section 1031 news and other related materials. | |
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Copyright 1995-2008.
Edmund & Wheeler, Inc. all rights
reserved. |
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Since
Section 1031 rules prohibit an Exchangor from selling US property and purchasing
foreign property, the easiest fix to a client that wants to acquire that special
offshore island residence is this; sell
Our
client went to work to get two existing rental properties in Vermont sold to
fund the purchase of the suburban property. She was very careful to arrange for a
closing on the new property three months away, giving her enough time to get the
existing properties sold. Since she was going up in value from the two old
properties, she got a good exchange and assisted her daughter in the process.