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terrid

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Posts: 1
Reply with quote  #1 
Hello. Hoping someone here can help. 

Spouse and I are selling a current rental home and hoping to do a 1031 exchange. We are buying home in another state for my parents to live in.  They are going to pay fair market rent for a couple of years at least.  After that though, I'd just like to charge them enough to cover mortgage payment and taxes (would be 25% less than fmv), which means at that time it would technically be considered personal use.  

So what about capital gains tax?  Will it be due when home is converted to personal use, or not until the sale? 


OHlandlord

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Posts: 3,734
Reply with quote  #2 
You need to see a tax accountant.  There are specific requirements for this type of exchange and all proceeds form the 1st sale must go to an intermediary (not you).  You then have a very limited amount of time to identify potential replacement properties and again, a limited amount of time to close on a replacement.  PLease contact you tax attorney about the procedures and tax consequences of this exchange.
Maxmillian

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Posts: 30
Reply with quote  #3 
Do the exchange .A title company can help .Then rent to whomever you want  at whatever price you want  The rent is taxable of course..The  capital gains  tax consequences come when you sell  and have made a profit 
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BritneyR

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Posts: 227
Reply with quote  #4 
You must take advise from a tax consultant.
 

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