1031 Exchanges
Hello all:
I did a 1031 in July 2004. I made reasonable profit and rolled to the new ouse. I am considering selling the exchange propert in August 2005( after one year of purchase).
How are the taxes calculated? is the net gain (purchase price of exchange property-sale price) added as income and then I am taxed on that as income based on my tax bracket?
I might be wrong but I think you will be taxed at 15% capital gains since you held the last property for one year.
Your taxable profit is the difference between your sale price and your cost basis. The cost basis for the exchange property is the original adjusted basis you had in the relinquished property plus any new money or debt you added to complete the replacement property purchase plus the cost of any capital improvements minus allowed depreciation.
Best to ask income tax questions in the Tax Strategies Forum.
_________________
No PMs please. I am not a paid subscriber.[ Edited by NewKidinTown2 on Date 03/02/2005 ]