Depreciation Schedules

Depreciation of your property is a complex topic, but residential improvements are depreciated over 27.5 years, while a commercial building is depreciated over 30 years. For a simple example, say you buy a commercial warehouse for $300,000. If you value the land at $50,000, then you would divide $250,000 by 30 (land does not depreciate). This allows you to take $8333.33 in depreciation each year. That can really help! Please note, depreciation is MANDATORY!! When you sell the building, all the depreciation you've ever taken on the building will be "recaptured" and taxed at 25%!! This "extra layer" of tax is often unexpected and makes an exchange even more valuable! Try out some scenarios on our tax calculator: http://www.1031x.com/tax_calculator.cfm

For more information: call 888-899-1031 or email us at infox@1031x.com

1031 Exchange and pay off of existing

Steven, May I apply 1031 funds from a condo rental sale to an existing mortgage on the building I use for my professional business?

 

Dear Ralph:  The IRS does not consider that sale of one property and the pay down of debt on a property that you already own to be a valid 1031x. Sincerely,

----- 
>> Steve Hickox
Attorney / President

More Info?  Click here:  http://www.1031x.com/

2120 S. Birch St.
Denver, CO 80222
888-899-1031
Email us with questions:  infox@1031x.com

1031 Exchange and NY State income taxes

I would like to know if NYS permits deferred state tax under a l031, and if not, what is the NY capitol gain rate?

 

Most States, including NY, have tax laws that grant deferral of State income tax along with federal income tax when the taxpayer completes a 1031x.  

Steve Hickox
Attorney / President

More Info?  Click here:  http://www.1031x.com/

2120 S. Birch St.
Denver, CO 80222
888-899-1031
Email us with questions:  infox@1031x.com

Use us anywhere in the USA for a 1031 exchange

Dear 1031x: I am selling in Virginia and buying in Delaware, I live in NY. Where should the QI be located to complete a 1031 exchange?

Dear Susan: I suggest that you use our company to complete your 1031 exchange. We are doing business in all 50 states. I assure you that our price and service will be second to none. Sincerely,

More 1031 Exchange Info

repairs after purchase

I have a question related to this subject. If we are receiving a total of $100K from the sale of a Lake Property (Profit $70K), and we intend to purchase a commercial building for $75K. Can we apply $25K of the lake property sale toward a new roof on the purchased property and still defer all taxes related to the sale or do we have to choose a second piece of real estate to apply the remaining $25K?

Dear Anonymous:  Thank you for contacting us.  The IRS considers improvements made to a property after purchasing it to be outside the 1031x. (taxable).  The best thing to do is to have the new roof put on prior to your purchase and have the roofing company paid as a debit off the sellers settlement statement.  What you are really doing is raising the sale price to $100K and having the seller pay for the new roof.  Does  this work for you ?  Sincerely,

  

Is a mobile home Like kind?

Dear 1031x.com,

I am a realtor and I have a client who is looking to 1031 his rental home into a mobile home. Can this be done and if yes under what circumstances. Please either call me or email me with any info that would be helpful in making this determination. I would consider using your firm to process the 1031 exchange.

Sincerely, J

Dear J: Thank you for contacting us. In some states there is a process for converting mobile homes to real estate. The process involves surrendering the title to the mobile home and placing the mobile home on the tax roles as real estate. If this is done then 1031x into the mobile home (now real estate) is no problem. Sincerely,

Steve Hickox
1031x.com, Inc.
2120 S. Birch St.
Denver, CO 80222
888-899-1031
infox@1031x.com

Dual use property

My brother and I inherited (via Living Trust) property in CA. Since the estate tax return was filed the property has appreciated $1.2M. We are considering a sale within the next year or so and seek information about 1031 exchanges. Specifically,

1. If one TIC currently lives in the inherited property (principle residence of my deceased parents) but the other does not, does it qualify for 1031? If not, how long does the property have to be unoccupied or leased to qualify?

2. Does a 1031 exchange defer both federal and state (CA) capital gains taxes? If state taxes are also deferred, does one have to exchange within the same state?

3. If one TIC lives in VA and the other in CA, upon sale which state is due the capital gains tax?

Thank you in advance for the initial consultation.

Dear Tom: Thank you for contacting. Your relinquished property can qualify for both tax exemption under IRC section 121 as to the owner using it a principal residence and for tax deferral as to the owner who is holding it for investment. It would be nice if the owner occupant paid the own not occupying some rent just to cement the investment intent of that owner. Yes 1031x defers both state and federal income in most instances (including CA). If you sell in CA it does not matter where you buy as long as it is in the US. As for as which state tax will apply is you do not do an exchange, generally you pay tax where you live. The state where the property is located CA has very high income tax (about 9%). If you live in VA, you will pay VA about 5% and then pay CA about 4%. What I am saying is that CA wants to get paid to but they will give you credit for the taxes you first pay in VA. I hope this is clear. If you need more let me know. Sincerely,

Steve Hickox

1031 exchange into fractional interest

I have a rental home property in California since 1987. I want to sell that rental home under 1031 Exchange and invest all of my capital gains in a partnership (may be TIC) in my friend's MOTEL business in PA, MD, & VA.

Does this qualify under 1031 exchange?

Dear Mr. P: If your purchase is structured correctly your exchange will succeed. You need to take title to the Motel in the same name that you sell. Yes, take title to the Motel as tenant in common if you own the CA property in your own name. You can 1031x 1005 of the relinquished property into a fractional interest in the replacement property. Sincerely,