DEAR BOB: My mother-in-law was recently widowed at age 60. She is considering a move from her primary residence. She will owe capital gain tax on the sale and wishes to eliminate such tax. Could she move out of the home, rent it for a brief while, and then do an Internal Revenue Code 1031 tax-deferred exchange without incurring tax on the eventual sale? We are familiar with the Internal Revenue Code 121 use test for 24 of the 60 months before the sale, but how long must a home be rented before it qualifies for an IRC 1031 tax-deferred exchange? --Joe C. DEAR JOE: Your mother-in-law should consult her tax adviser to determine her adjusted cost basis for her home. Depending on the state where the house is located, if her late husband held a full or partial title to the house, by inheritance ...
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