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1031 Like Kind Exchange between 2 Tax Years

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Level 1

Hello!

I have a question about a client who sold 1 rental property in December of 2019 and purchased 1 like kind exchange property in January of 2020. On top of that, there was a $0 gain or loss. The sum of the old property's sale price, minus the existing mortgage, and subtracting the closing/selling costs equals the new properties sale price, to the penny. 

Does anyone have a tip on how to complete the exchange? Whenever I enter in the figures, I receive wildly different results, I must be doing something wrong...

Thanks in advance for the help!!

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6 Replies 6
Highlighted
Level 11

"The sum of the old property's sale price, minus the existing mortgage, and subtracting the closing/selling costs equals the new properties sale price, to the penny."

If the old property sold for $500,000 but had a $400,000 mortgage, and the new property cost only $100,000, I think you're in trouble.  

Highlighted
Level 1

These aren't traditional houses. He had less than a 1% interest in a massive complex in Florida. He pretty much exchanged his property for a different one with a higher percentage. He did the exchange within the same company that manages these mega complexes (for lack of a better term). Because of the % of ownership they made sure that the properties exchanged with no gain or loss. 

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Highlighted
Level 11

No one ever went broke investing in Florida real estate.  Well, OK, no one ever went broke selling a little piece of a Hurricane Alley project to John Doe in return for another piece of a project from Richard Roe, who took the money to buy a sliver from Jane Smith who had acquired it from Mary Jones, former wife of John Doe who ended up with it in their divorce.  

Everyone in Florida is honest, and when they file bankruptcy they get to keep their mansions.  That's why OJ Simpson moved there, and I understand others from New York have made the move recently also. 

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Level 15

It is reported totally on the 2019 tax return. There are various worksheets out there, as Google will show you https://www.google.com/search?q=1031+exchange

I prefer to spend a couple of bucks on Tax Tools It has a super 1031 worksheet that leads you to doing the PS input to get the forms right. In addition it has many other tools, including a simple tax planner, flow charts to help you with not so obvious how to file and can I claim that kid questions, and more! They have excellent support. I bet if you bought it now, you could get next year free. 


ex-AllStar
Highlighted
Level 1

Thanks for the awesome tip! I'll check that out!

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Highlighted
Level 15

😉Sounds like a dog. Trading one TIC for another TIC. 😉

Have Fun!

 


ex-AllStar
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