Agent

Investor gets bad news about tax strategy

No profit doesn't mean no taxes

The real estate event of the summer
Connect with other top producing agents at Connect SF, Aug 7-11, 2017

Editor's note: Robert Bruss is temporarily away. The following column from Bruss' "Best of" collection first appeared Sunday, March 19, 2006. DEAR BOB: I bought a rental property in 1991, which I sold for $450,000. To avoid capital gain tax, I used an Internal Revenue Code 1031 tax-deferred exchange to buy another rental property for $450,000. After renting it for 12 months, I moved in and have lived in it for 24 months. If I sell this property at the same $450,000 price, will I owe any capital gain tax since I made no profit? Is this a good way to avoid capital gain tax? --Sim Y. DEAR SIM: Nice try! But Uncle Sam is way ahead of you. Your adjusted-cost basis for the $450,000 rental house you acquired in the Internal Revenue Code 1031 tax-deferred exchange was not $450,000. Purchase Bob Bruss reports online. Instead, it was your $450,000 purchase price minus the deferred capital gain on your old rental property minus the depreciation you deducted on the acquired prope...