Posted by William L. Exeter on November 29, 2004 at 20:09:40:
You must own the property for at least five (5) years and you must have lived in it as your primary residence for at least two (2) of those five (5) years.
Changes to Combined 1031 and 121 Trans - Posted by William L. Exeter
Posted by William L. Exeter on October 28, 2004 at 16:08:13:
President Bush signed H.R. 4520 into law on October 22, 2004. H.R. 4520 contains certain provisions that affect transactions where an investor has combined a 1031 Tax-Deferred Exchange with a 121 Exclusion pursuant to Sections 1031 and 121 of the Internal Revenue Code.
The provisions contained within H.R. 4520 created a five (5) year holding requirement for an investor who wants to exclude capital gains pursuant to a 121 Exclusion from the sale of his or her personal residence that was originally acquired as rental property as part of a 1031 Tax-Deferred Exchange transaction.
For example, prior to H.R. 4520, an investor that owned rental property could sell the rental property and acquire another rental property (typically a single family residence) through a 1031 Tax-Deferred Exchange. After renting the property for 12 months or more, the investor would move into the rental property and convert it into his or her primary residence. Once the investor has lived in the property as his or her primary residence for at least 24 months, the investor could sell the primary residence and exclude up to $250,000 in capital gains if single and up to $500,000 in capital gains if married pursuant to a 121 Exclusion.
Under the new tax law the investor is now required to hold the property for five years before they can exclude capital gains under a 121 Exclusion if the property was acquired as part of a 1031 Tax-Deferred Exchange. The provisions of this new law are effective for personal residence sales occurring on or after October 22, 2004.
Re: Changes to Combined 1031 and 121 Trans - Posted by John Ochoa
Posted by John Ochoa on November 23, 2004 at 13:10:00:
“Under the new tax law the investor is now required to hold the property for five years before they can exclude capital gains under a 121 Exclusion if the property was acquired as part of a 1031 Tax-Deferred Exchange.” Hold the property means…as a rental for 5 years before making it a primary residence eligable for sale as a primary after 2 years? Or converting a 1031 to a primary, living in it for 5 years before selling, excluding the cap gains?