1031 exchange:
What Happens if I Trade Down in Value?
Hi, Thanks for taking my question.
I purchased a condominium
three years ago as an investment, for $145,000.
Todays FMV is
approximately $250,000, leaving me with a Capital Gain of $95,000 (using the calculator).
I have found a new home which I would like to purchase, but the cost of this investment is only $160,000. Is there any way to qualify for a partial sale/exchange to minimize my taxes?
Dear D:
In your example, if you do a 1031 exchange, you would only be deferring tax on $15K.
($160 new FMV - $145 old basis)
The only way to make a 1031 exchange really valuable to you is for you to buy a second property so the the value of the replacment properties is cose to or above the sale price of the relinquished property.
Sincerely,
Steven Hickox, Attorney and President
1031x.com, Inc.
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