Personal Property Exchanges

October 19, 2009 · Ron Ricard - Investment Property Exchange Services, Inc · 2 Comments

Personal Property Exchanges – The Other Side of Section 1031

Many Taxpayers are familiar with §1031 exchanges of real estate. What many people do not know is that section 1031 applies equally to the exchange of personal property. Taxpayers that sell personal property used in a trade or business or held for investment may miss a valuable opportunity to defer the tax gain on the sale if they do not consider like kind exchange treatment for their transaction. Read more

Converting your Primary Residence into Rental Property

September 2, 2009 · Ron Ricard - Investment Property Exchange Services, Inc · 5 Comments

The tax code allows you to keep some or all of the gain on the sale of a primary residence if you meet certain conditions. IRC §121 permits the exclusion of realized capital gain of $250,000 for a single person and $500,000 for a married couple upon the sale of a home that was their primary residence for any two years during the five years preceding the sale. If your gain is in excess of this exclusion, you may have to pay capital gain tax on the amount over the exemption. This exemption cannot be used more than once every two years.

Let’s assume you have lived in your home as a primary residence more than two years, but decide to move out and turn the property into rental housing. If you sell the property less than three years after you move out, you still qualify for that primary residence exemption of $250,000 or $500,000. So if your gain (profit) is less than those thresholds, you will have no tax to pay on your gain, though you will have to pay depreciation recapture tax on the amount that you depreciated the property while it was a rental. Read more