Talk:Tax Shelter for Gain on Secondary Home
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From TaxAlmanac
If a taxpayer sells his second home held as a rental property and makes a large gain, a during the same year buys a building to house a manufacturing facility, can he avoid paying taxes on the gain?
Posted by: Abdulkhan on 17 June 2005 at 10:30 a.m.
- He would have to do a qualified 1031 section exchange through an intermediary and roll all of the proceeds (gain) into the new investment property. He wouldn't be able to pull any monies out of the transaction.
- The question: If a taxpayer sells his second home held as a rental property and makes a large gain, a during the same year buys a building to house a manufacturing facility, can he avoid paying taxes on the gain?
- The answer: No.
- Elaboration: To defer gain recognition, the taxpayer must exchange the property for like kind property in a manner that meets the requirements of IRC Section 1031. Consult a CPA or other tax professional specializing in tax deferred transactions.
