Posted by randyOH on April 27, 2005 at 23:34:05:
Carl,
You will also be taxed on your net debt relief (boot). This would be in addition to any cash boot. Also, the depreciation taken will be taxed at 25%. Of course, any recognized gain will be taxed as ordinary income on your CA tax return.
HTH,
Randy
1031 question… - Posted by Carl CA
Posted by Carl CA on April 27, 2005 at 13:39:56:
Doing my first 1031 exchange.
I intend to relinquish two long term rentals for a single vacation rental
property. The properties being relinquished have a combined market value of
about $320K (about $300K after sales expenses). The combined debt on
both properties is $140K. I am purchasing the replacement property for
$260K. If I roll all existing equity into the replacement property, my debt
load will be reduced. Does this negate my ability to do a 1031? Or will I just
owe taxes on the “boot” of the reduced debt?
Thanks in advance.
Carl
Re: 1031 question… - Posted by William L Exeter
Posted by William L Exeter on April 30, 2005 at 20:30:43:
You can absolutely complete a 1031 exchange. You would only be taxed on the boot portion of the transaction to the extent that you have depreciation recapture (first) and capital gains (second).
Re: 1031 question… - Posted by David Krulac
Posted by David Krulac on April 27, 2005 at 19:22:04:
you have $300k to roll ver and are buying $360K, it looks like about $40k boot which would be taxable Federal for 15% LTCG or about $6,000 in tax.
Re: 1031 question… - Posted by Carl CA
Posted by Carl CA on April 27, 2005 at 19:47:42:
Thanks David,
Does the IRS want to recapture any depreciation above and beyond the
LTCG?
Carl