1031 exchange real estate professional as investor
Dear Steve: First of all, I would like to thank you for answering my question. My wife and I are planning to go into real estate investing (both residential
and commercial) In consultation with our accountant, he mentioned that we cannot do a '1031 exchange' if my wife is a 'real estate professional'. The profit we get from selling a property will be taxed as a capital gain. Is this true that the 1031 exchange only reserved for 'real estate investors'? I haven't heard of this and wonder if you can shed a light on this issue. Thank you,
and commercial) In consultation with our accountant, he mentioned that we cannot do a '1031 exchange' if my wife is a 'real estate professional'. The profit we get from selling a property will be taxed as a capital gain. Is this true that the 1031 exchange only reserved for 'real estate investors'? I haven't heard of this and wonder if you can shed a light on this issue. Thank you,
Dear K: If your wife wants to do 1031 exchanges she simply needs to conduct two separate businesses. Certainly many real estate professionals are also real estate investors (doing 1031 exchanges). She must just keep good records and keep the two businesses separate. Sincerely,
Steve Hickox
Attorney / President
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