What tax issues should I consider when selling an investment property, including a 1031 exchange?
Selling investment property is usually taxable. A 1031 exchange can defer that tax if you reinvest in other investment real estate within strict deadlines.
- Under Section 1031 of the Internal Revenue Code, no gain is recognized when real property held for business or investment is exchanged for like-kind real property held the same way.
- The replacement property has to be identified within 45 days after you transfer the old one, and received within 180 days, or by your tax return due date if that comes first (26 U.S.C. 1031(a)(3)).
- Most exchanges use a qualified intermediary, set up before closing, so the sale money never passes to you.
- A home you live in is not investment property for this purpose.
- Talk to your CPA before you list, not after you sign a contract.
This answer explains the general process in Florida. It is not legal or tax advice; for your situation, rely on a Florida attorney or CPA of your choice.
Primary law
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