1031 And Cash-out

DPAC profile photo

How would we be taxed on the cash out portion of a 1031 where the properties being sold were a mix of long term and short term holdings?

Example: We have $1m equity gain in a property bought two years ago. We have $800K gain in a property bought 6 months ago and $200K gain in another property bought 3 months ago. So that’s $2m total equity gain, with $1m long-term and 1.2m short-term.

If we use only $1.5m in the exchange and cash-out $500K, at what rate will that $500K be taxed? Can we specify that the cash-out is to be taken from the long-term property so it will be taxed at 15%? Or will we get nailed at the short term rate?

Thanks for the input,

Comments(1)

  • DPAC14th June, 2005

    It makes perfect sense. Thanks for clearing that up.

Add Comment

Login To Comment