Bill <brownwp[at]longwood.edu> wrote:
- quote -

No, not quite.

If the property was acquired via a 1031 exchange then the
Sec 121 esclusion cannot be claimed for 5 years. But if is
in an exchange and the next 2.5 year it is rented and the
last 2.5 years it is your main home, you get the Sec 121
exclusion, less the unrecovered Sec 1250 depreciation.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

I'm with Art on this one.

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

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CA tax girl wrote:

- quote -

Not exactly. If basis on the property is reduced because of
an earlier 1031 exchange, then the taxpayer has to live in
it for 5 years before a 121 exclusion is available.

Regards,
Bill

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wrote:

- quote -

Are you sure?

I thought the change required property acquired in a
like-kind exchange to lose its eliibility for Sec 121 gain
exclusion for 5 years following the exchange. That in
itself would allow you to rent it the first 2.5 years and
live in it as your personal residence the next 2.5 years,
then sell and use the exclusion less Sec 1250 depreciation.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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CA tax girl wrote:

- quote -

That's wrong. If the property has been 1031 exchanged, then
you cannot claim the exclusion until 5 years have passed.

The property having been a rental doesn't count, only the
1031 exchange. You don't have to LIVE in it for the 5 years
-- only 2 of the 5 years preceding the sale. You DO have to
own the property for the 5 years.

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CA tax girl wrote:

- quote -

Thanks for that one. I must have been daydreaming at tax
school, (IF they covered it).

Missy Doyle

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Thanks for the catch - the damn thing's so big I continually
forget to check there.

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Careful on that one. 2004 Job Creation Act changed the
rule. Once the property's been tainted as a rental, you
have to live in it for FIVE years before you can
successfully convert it into personal property and take the
cap gain exclusion ($500K for MFJ)

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Depends on what you want to do and what your current needs
are.

Assuming that you don't want to move back into the old
townhouse for the next 2+ years, a like-kind exchange would
be best taxwise because no gain recognition and hence no tax
(plus you get a nice beach house).

But that, again, is in a vacuum - you should be talking to
an investment advisor, not getting free advice from tax
nerds.

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"Bill Kilgore" <billkilgore[at]cox.net> wrote:

- quote -

I can barter tax preparation and planning services for real
estate.

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

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Bill Kilgore wrote:

- quote -

Move back into it for two years and take the profit tax
free. You will have owned and lived in 2 of the previous 5
years.

Missy Doyle

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I need to get some of your opinions on how to handle this
issue

Here's the story: I have owned a townhouse for around (18)
years and paid 130k for it . We moved out (5) years ago and
rented it out. Since that time real estate values have
risen and it is worth around 350K. We are thinking of
selling it and needs some ideas on what to do with the
capital gains. Here's a couple of ideas we have had:

Do a like-kind exchange for a beach house rental.

Take the profit, pay the capital gains taxes, and used the
rest to pay off our current house.

Take the profit, pay the capital gains taxes, and invest the
profit in the stock market.

So, does any body have any other ideas or any problems I
would have in doing the above?

Thanks
Bill

======================================
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