Impact of Depreciation Recapture on Exchanges
Depreciation is an integral part of calculating the adjusted basis of property, and thus is an important component of the non-recognition provisions of IRC §1031.
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Exchanges of Foreign Property
Exchangers may freely exchange properties throughout the United States, trading property in one state for replacement property in another state.
Estimating the 1031 Tax Deferral on the Sale of Investment Property
An Exchanger should always consult with competent independent legal and/or tax advisors to determine the applicability of any IRC §1031 tax deferred exchange benefits.
Do Vacation and Second Homes Qualify?
It has been established that vacation or second homes held by the Exchanger primarily for personal use do not qualify for tax deferred exchange treatment under IRC §1031.
Converting a Principal Residence to Minimize Taxes by Combining IRC §1031 and §121
IRC §1031 permits the deferral of capital gains tax on investment or business use property that is exchanged for like-kind investment or business use property of equal or greater value.
1031 Exchange Disaster Relief Deadline Postponements
Rev. Proc. 2007-56 permits extension of IRC §1031 exchange deadlines upon issuance of an IRS Notice or other guidance permitting relief to taxpayers due to Federally declared disasters.
FIRPTA Issues in 1031 Exchanges
The Foreign Investment in Real Property Transfer Act (IRC §1445 & Treasury Regulations §1.1445), more commonly known as “FIRPTA” is a federal law that requires withholding on dispositions of U.S. real estate by “foreign persons,” defined as a nonresident alien individual, a foreign corporation that does not have a valid election under section 897(i) to be treated as a domestic corporation, a foreign partnership, a foreign trust, or a foreign estate.
