Key Takeaways
A 1031 exchange is a tax break. You can sell a property held for business or investment purposes and swap it for a new one that you purchase for the same purpose, allowing you to defer capital gains tax on the sale.
Proceeds from the sale must be held in escrow by a third party, then used to buy the new property; you cannot receive them, even temporarily.
The properties being exchanged must be considered like-kind in the eyes of the IRS for capital gains taxes to be deferred.
If used correctly, there is no limit on how frequently you can do 1031 exchanges.
The rules can apply to a former principal residence under very specific conditions.

yes you defer them tell death. so when your kids get the property and it's now worth 5 million they sell it for 5 million and there is no capital gains becus they didn't make anything above what it was worth when they got it.

if you sell it for 5 mill and you bought it for 700k 20 years ago you will have to pay the taxes on the difference.


at least as I understand it.

You forget the value for tax purposes should be the depreciated value, if you have been claiming depreciation. So you will, I would guess, have to find property of like value to your depreciated value?

not from my understanding at all. It can be an upgrade or multiple propertie as long as its the same type from what I was reading. example single family home to single family home or homes . I didn't dig deep yet I'm not ready to sell anything but have been thinking about building or buying some more rentals and was looking into tax advantages.

"Special Rules for Depreciable Property
Special rules apply when a depreciable property is exchanged. It can trigger a profit known as depreciation recapture, which is taxed as ordinary income.
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In general, if you swap one building for another building, you can avoid this recapture. However, if you exchange improved land with a building for unimproved land without a building, then the depreciation that you’ve previously claimed on the building will be recaptured as ordinary income.

Such complications are why you need professional help when you’re doing a 1031 exchange."

P.S. Good Luck!

I have never been shy about hiring people when needed. But doing research first helps you to know, yep its over my head and to know what questions to ask to see if your professional is good and knowledgeable or just barely enough to get a paycheck.

Most recently I'm thinking I'm going to buy mom's condo for her. She seems to want that knowing it's a good deal and should be at least a 60k profit I can get selling it when she is gone. And it will make things easier on her now. I don't really want it or the hassle of selling it. I could rent it but would prefer it not be 130 miles from home every time there is an issue comes up..

but It's not a decision about me I don't think I want it. I would rather have new fence, tractor, an barn. But it's about helping mom and making her happy. she was told 5 yeas survival rate of her cancer at her stage was 22% she was at 5 years this spring. she quit taking her cancer meds tired of them making her feel bad and she doesn't think she will last but another year or two. I think she will be here in 15 years at least I hope. But with interest rates coming down I may finance it and not wipe out my cash savings. It would make her happy.

That is exactly right. Of course a home is an asset. The big riddle is, is it an investment?

My opinion in the simplest definition of investment is yes. Anything you purchase with an expectation and histoical precedence of the valuation going up, is an investment. Doesnt matter if it is stocks, mutual funds, classic cars, or homes. They all historically go up in value. Just because you pay property tax every year or make occasional repairs doesnt disqualify it from being an investment.

What are your thoughts 49...?