There was tremendous turnout for the 1031 seminar presented by Mr Ron Ricard, VP of IPX Exchange.
The tax deferred exchange, as defined in §1031 of the Internal Revenue Code, By completing an exchange, the Taxpayer (exchanger) can dispose of investment or business-use assets, acquire Replacement Property and defer the tax that would ordinarily be due upon the sale.
To fully defer the capital gain or recapture tax, the Exchanger must:
(a) acquire “like kind” Replacement Property that will be held for investment or used productively in a trade or business,
(b) purchase Replacement Property of equal or greater value,
(c) reinvest all of the equity into the Replacement Property, and
(d) obtain the same or greater debt on the Replacement Property. Debt may be replaced with additional cash, but cash equity cannot be replaced with additional debt. Additionally, the Exchanger may not receive cash or other benefits from the sale proceeds during the exchange.
Effective January 1, 2018, IRC §1031 applies only to real estate assets. It does not apply to exchanges of stock in trade, inventory, or property held for sale, such as property acquired and developed or rehabbed for purposes of resale.
Code Section 121
Under §121(a) if a taxpayer uses the property as their Primary Residence for two (2) out of the last five (5) years, the taxpayer can exclude some or all of the gain (from their income) on the sale of the primary residence if certain conditions are met:
The amount of gain excluded shall not exceed $250,000 (a single-filer) or $500,000, if married filing jointly;
The §121 Exclusion may only be used once every two (2) years;
Gain excluded only applies to gain accrued during a “qualified use” period. Simply put, gain accrued while the property was not used as a Primary Residence is not eligible to be excluded;
The §121 Exclusion may not be applied to any depreciation taken since 1997.
You can combine the two tax codes for more tax saving on the sale of primary residence, for details, please email us for a copy of flyer prepared by IPX. Mr Ron Ricard of IPX Exchange can also address your questions. Email: firstname.lastname@example.org