Agent

How to avoid tax on sale of rental house

Owner seeks alternatives to IRS 1031 exchange

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DEAR BOB: My rental house in Scottsdale, Ariz., is worth $375,000. It cost me $57,000 in 1977. I depreciated it on a 20-year straight-line basis since I moved out in 1981. If I decide to sell this property to exchange it for a more expensive property, then I'm back in debt. Is an Internal Revenue Code 1031 exchange the only way to sell and avoid tax? – Terry S. DEAR TERRY: Yes. If you want 100 percent tax deferral, an IRC 1031 tax-deferred exchange for another investment or business property of equal or greater price and equity is the way to go. Purchase Bob Bruss reports online. If you are tired of "tenants and toilets," an alternative is to make a tax-deferred trade into a management-free TIC (tenant in common) investment, such as a shopping center, office building or apartment building. Finding quality TICs isn't easy, but you won't owe any capital gain or recapture tax with such a trade. Or, you can kick the tenant out, move into your Scottsdale house, and live there at l...