Non taxable exchanges
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Non-taxable exchanges. Sale of a Personal Residence. Section 121 $250,000 ($500,000 for mfj) 5 year ownership test 2 year use test - principal residence pro-rate for forced sale special rules for mfj filing limit once every two years does not apply to depreciation gain

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Non-taxable exchanges

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Non taxable exchanges

Non-taxable exchanges


Sale of a personal residence

Sale of a Personal Residence

  • Section 121

    • $250,000 ($500,000 for mfj)

    • 5 year ownership test

    • 2 year use test - principal residence

    • pro-rate for forced sale

    • special rules for mfj filing

    • limit once every two years

    • does not apply to depreciation gain

    • old section 1034 and 121 rules repealed


Involuntary conversion

Involuntary Conversion

  • Section 1033

    • Property to $ to Property

    • Elective generally

    • Qualifying event

      • theft, casualty, condemnation or sale under threat of condemnation

    • Time test for reinvestment

    • Similar or related in use test for replacement property


Like kind exchange

Like Kind Exchange

  • Section 1031

    • Property to property exchange - no actual or constructive receipt of cash allowed

    • Eligible property must be held for use in a trade or business or as an investment for profit

      • ineligible property: inventory, securities, interests in partnerships, trusts or rights in lawsuit

    • Like kind property: any real estate for any real estate regardless of class; personal property of like class


Like kind exchange1

Like Kind Exchange

  • No gain or loss shall be recognized on the exchange of property held in a trade or business or for investment if such property is exchanged solely for property of a like kind.

    • Not like kind property is considered “boot”

    • Boot received is the measure of recognized gain

    • Boot is money, debt relief, fmv of not like kind property received


Like kind exchanges

Like Kind Exchanges

  • Non-simultaneous exchanges

    • 45 days identify property

    • 180 days exchange property

  • Money may remain unpaid or in escrow out of reach of transferor


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