capital gains tax
I was wondering if I could get some advice. I have some lake front property that I would like to sell. Aside from the capitl gains tax is there any other way to avoid paying at the high tax rate. Also does anybody know if I can use the 1031 on just a portion of the sale of the property. (Then I would be taxed on just the remaining sale price) Thanks
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For your first question, you need to be a little more specific. What tax rate are you trying to avoid?
Yes, it is possible to use your lakefront property as the upleg in a 1031 exchange, then reinvest only a portion of the proceeds into your replacement property -- deferring capital gains taxes on that portion. The balance of the sale proceeds that did not get used in the exchange will be taxed.
You can apply the 1031 exchange structure to the portion of the property that is held for investment, income production (rental) or used in a trade or business. As long as a portion of the property qualifies based on the above criteria, then you could structure the sales as a partial 1031 exchange and pay capital gain taxes on the balance of the sale.
Hope this helps.
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William L. Exeter -
Diversified Exchange Corporation[ Edited by wexeter on Date 07/09/2003 ]