like kind exchange of rental property to new purchase of vacation home/ rental property

Forum|Forum|5 years ago
February 7, 2021
6 replies
25 views

Client has sold duplex rental property that he had for 10 years and has made a long-term capital gain of $100,000. He subsequently purchased a lake property for 250,000 that he plans on using for both personal time and when not using personally, he will rent out. he plans on renting out the lake home property approximately 40% of the year.

1. Can this be done as a like kind exchange?

ProSeries Professional

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Best answer by IRonMaN

But if he deposited the money into his checking account, that prevents the like kind exchange from happening. He needed a third party to handle the cash in order to qualify for a like kind exchange.

IRonMaN

Level 15

Ignoring whether or not the property acquired qualified for a like kind exchange, since it sounds like he got the cash, deposited the money in his checking account, and wrote a check for the new property - no. Once someone touches cash, the like kind exchange route is dead.

Slava Ukraini!

J

jaftaxAuthor

Level 3

thank you Iron Man, but he did buy the new property within the 45 day timeframe for like kind exchange. and the new property was transferred to him within the 180 day limit. so I am still confused as to whether this is a like kind exchange. I do appreciate your expert advice. I follow you all the time and appreciate your input. he did deposit his original sale into his checking account, and within 45 days he had already purchased the second property. he did not buy the second property from the same person he sold the first property to . thank you.

IRonMaNAnswer

Level 15

But if he deposited the money into his checking account, that prevents the like kind exchange from happening. He needed a third party to handle the cash in order to qualify for a like kind exchange.

Slava Ukraini!

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