- quote -

In an EXCHANGE you neither SELL nor BUY anything (the
qualified intermediary does). Any cash received in the
transaction is taxable to you (as ST or LT gain).

I think the earlier confusion on this thread was caused by
your reference to the Florida property as a "vacation home".
That implies that it is a personal use property, not
investment or business, which would not be eligible for a
1031 exchange.

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- quote -

Neither this nor the one I buy will be personal property,
both are/will be rental only. The only difference will be
the prices. I will sell for a higher value than I buy for.
So I will have a profit.

Thanks

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- quote -

If EITHER property is personal use property you cannot do a
1031 exchange. I don't recall which property you're
referring to as a rental property.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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- quote -

I am sorry, I should have mentioned this is a rental
property for short term rentals. Does that make any
difference?

Thanks

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"steve" <lartonnoreply[at]dsl.pipex.com> wrote:

- quote -

Yes, sell for less. You can't use a 1031 exchange on
personal property.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062

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"steve" <lartonnoreply[at]dsl.pipex.com> wrote:

- quote -

If you SELL within a year, your "profit" will be subject to
short-term capital gains rates, which are the same as
ordinary income.

- quote -

What you do with the profit is irrelevant to the taxation.
Buying another rental property has nothing to do with it.

- quote -

A 1031 exchange could be arranged (not a SALE or BUY, but an
EXCHANGE), but you will probably realize a taxable component
if you also receive cash in the trasaction.

- quote -

Sell after the one year holding period, to make your gains
LONG TERM or do a 1031 exchange. An exchange only defers
your tax liability, but does not eliminate it.

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"steve" <lartonnoreply[at]dsl.pipex.com> writes:

- quote -

Yes.

- quote -

Not to mention the fact that 1031 doesn't apply to
personal-use property.

Phil Marti
Topeka, KS

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"steve" <lartonnoreply[at]dsl.pipex.com> wrote

- quote -

Yes. It's not your primary residence.

- quote -

You can't use a 1031 exchange because the first property
isn't investment/income property.

- quote -

Since the tax is on the gain, and you actually have a gain,
then the funds are available to pay the tax. The only way
to reduce the tax is to reduce the gain.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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I have owned a vacation home in Florida for 6 months, it is
a new home and I agreed to buy it 14 months ago.

I am thinking of selling and 'realising' a profit. However I
would then buy a cheaper vacation property. Any profit would
be used to buy the next home and hopefully do away with or
have a reduced mortgage.

Would the profit on the first home be liable to tax, I have
looked at 1031 exchange and I am not sure I can use it as I
am trading down.

Any advice on reducing my tax liability?
Thanks

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