Thank you for your response. One of her adult children is planning to lease replacement property for 4-5 years. Is there a way to deed it to that child at some point, therefore allowing it to become child’s primary residence?
can she put replacement porpoerty in living trust, or something for Fed 15% to be ‘forgiven’
what about an llc or flp? or Land Trust using entities and/or partnerships as trustees/beneficiaries?
can she deed it to her children,grandchildren and/or family trust/partnership?
Georgia - My 78 yr-old mother is selling rental property she’s had for years. Just under $200K - all equity. I am hearing that capital gains taxes are 25% depreciation, 15% fed and 6% state - is this close?
What are other options besides 1031 exchange? She does not want to deal with managing rental property. Can she split the gains - past into 1031, part into something else?
I’m learning as fast as I can!! She has a contract set to close 25th Oct.!
Posted by David Krulac on October 13, 2006 at 18:25:32:
its possible to do a partial 1031 exchange and pay tax on the cash, called “boot”.
The Federal tax is 15% on the appreciation and 25% on depreciation recapture. I don’t know your state tax.
One option is to move into the property, live there for 2 years as your primary residence and then sell with $250,000 TAX FREE. (Federal)
She could not sell but hire a professional manager.
Stepped up basis will be lost if she sells. But if she keeps the rental and it passes in her estate; then you would “forgive” the Federal 15% and 15% taxes.
The 15% is the lowest its been in years. Its likely to go up in the future, particularily with changes in tax law and new president and continueing deficets.