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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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PowerPoint Slideshow about ' Non-taxable exchanges' - elon


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Presentation Transcript
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    • old section 1034 and 121 rules repealed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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