Discussion:Primary residence sold question

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Discussion Forum Index --> Tax Questions --> Primary residence sold question

Dsglouise (talk|edits) said:

19 May 2007

A client has an apartment in foreign country that she is about to sell for $250K. The entire $250K is a profit. She lived in this apartment 7 years ago, then moved to US. The apartment was unoccupied for all these years.

She got married in US and bought a new house for $300K. Now she is selling this house that belongs to her and her (already) x-husband for $500K, making $100K (and her X gets another $100K)

Also she is in a process of buying a $350K house.

What kind of taxes is applied in this case? Thanks

Death&Taxes (talk\|edits) said:	19 May 2007
Foreign apartment is a taxable gain of 250K; assuming that she had lived in the US house 2 of the last five years, her share of the gain will qualify for a Sec. 121 exclusion.

Dsglouise (talk|edits) said:

19 May 2007

Death&Taxes, thank you for your reply.

Do you think that 1031 Property Exchange can be applied for this case,

if she is selling both houses at once, and at the same time buying a new house?

Death&Taxes (talk|edits) said:

19 May 2007

More than likely, the answer is no. Investment or business property is swapped for other investment or business property. The house in the US does not qualify because it was her residence, and the personal use from years ago may or may not disqualify the foreign property. There have been several discussions on the board recently on type of property to qualify. Even if the apartment did qualify, the replacement must be a business or investment property (land?), not a residence. I think you might also find it difficult to find a qualified intermediary when dealing overseas.