Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 258 May 14, 2004
|
Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 258 May 14, 2004 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
 » From: Waikoloa, HI Aloha Tax Mama, My husband and I want to use the gains from the sale of our townhouse of 10 years to buy land and then build a house which we then intend to sell it immediately, repeating the process using the 1031 exchange vehicle. My husband is a licensed general contractor in HI. Our plan is to get construction loans to build,(our gain is less than $100,000, not enough to do much in HI). Can we use the 1031 exchange to leverage our investment and what if any is the tax consequence and time rules regarding resale of land with new residential construction? Thank you (Mahalo) for your time and answer. We are now in a 45-day escrow process. Pearl  Dear Pearl, Good news. You don't need to stress anymore. If you've been living in that townhouse for 2 years out of the last 5, you and your husband can receive up to $500,000 of gain tax-free, no strings attached. If you haven't lived in it, then, yes, you'll need to use the 1031 exchange tool. I can't give you detailed answers without spending a couple of hours on the project. But there are open questions -
These are issues tax pros argue about all the time. Here are a couple of sites that address 1031 exchanges in detail. Realtor.Org's "Field Guide to 1031 Exchanges Realty Exchanges But if you're going to make a business out of doing this, I STRONGLY urge that you get a good local, tax professional who is thoroughly versed in 1031 exchanges, to work with you. It's a touchy area. And one little mis-step can cost you the whole exchange and cause all your profits to be taxed immediately. Had it been me? I would have worked out all the details before I sold the condo. Then, I'd know what all my options are. Incidentally, if you lived in the condo and call sell it tax-free, why not move into the new place, live in it for two years, and then sell that tax-free two. Why not simply plan to sell a home every two years and save all the stress, complications and the threat of losing the tax benefits? Best wishes, Eva Rosenberg Your TaxMama  |
 |
 |
 |
 |
| Library of Congress - ISSN 1532-0790 Copyright © 2000-2007 - Eva Rosenberg |
|
Home | This Week's Issue | Articles by TaxMama | For Tax Pros Investment Secrets | IRS News | Smart Tax Moves | Critical Dates Using Money Wisely | Money Funnies & Inspiration | Because We Care About TaxMama | Our Privacy Policy | Legalese and Disclaimer | Press Page |
|
|
 |
Site design by Serenata Design. |
